14 ms·

Twitter Sues Elon Musk

129 points by rurp 4y ago

dools 4y ago
- d3nj4l 4y ago
  If the court finds for Musk, why would he have to pay?
  - dools 4y ago
    Yes meant to say funds for twitter
- Galaxity 4y ago
  Except that Musk can't legally be president.
- sn0w_crash 4y ago
  Musk is much more powerful in his current position. Also he was not born in the US and cannot run.
  - himinlomax 4y ago
    You don't actually have to be born IN the US. See John McCain. But Musk still can't run.
    - deidei 4y ago
      > Musk still can't run Can you please explain this?
      - Ekaros 4y ago
        USA president must be older than 35 and natural born citizen. That is born either on the soil of USA or to parent who is citizen at the time of birth.
    - ngc248 4y ago
      McCain was born in the panama canal control zone and at that point the panama canal control zone was controlled by the US.
- nocoiner 4y ago
  I assume you’re being tongue in cheek (especially given Musk being constitutionally unable to run for president), but the president of the United States doesn’t appoint judges to the Delaware Court of Chancery. And that court is amazingly efficient, effective and incredibly incorruptible.
  - undersuit 4y ago
    Aww darn, Musk doesn't have 6 years of Delaware residency, because becoming Governor of Delaware is probably a lot easier than amending the US constitution to allow a non-native citizen of the US to become president.
AzzieElbab 4y ago
How is this supposed to end well? Imagine Twitter wins the lawsuit…
- nocoiner 4y ago
  Not too difficult to image at all - EM draws upon the contractually committed financing he presented to the Twitter board (the bulk of which is coming out of his own fortune) and does what he agreed to do: but Twitter for $44 billion. Just like the merger agreement says. If Twitter wins the suit, EM will be in exactly the place he bargained to be in when he signed the merger agreement: the proud new owner of Twitter.
  - perilunar 4y ago
    who promptly fires everyone at Twitter who was involved in the lawsuit?
    - janosett 4y ago
      The people involved in the lawsuit that Twitter won will not likely have trouble finding another job. That will be a career triumph!
    - mlyle 4y ago
      I think Musk was probably gonna fire a whole lot of management team in his original plan. They're not worse off...
    - square_usual 4y ago
      Those people don't work at Twitter; they're board members.
  - TheSpiceIsLife 4y ago
    EM interference.
- dragonwriter 4y ago
  That would be ending well, from the perspective of Twitter’s current stockholders.
phendrenad2 4y ago
Wow, it really does ask the court to force Elon to find financing and buy the company. I wonder if there's precedent here.
- nocoiner 4y ago
  EM already HAS committed financing. Now, he can probably blow up the commitment from his banks by continuing to engage in egregiously bad faith behavior, but under the merger agreement and the financing commitment papers, he’s required to draw on that committed debt. And, if the debt shows up like it is contractually obligated to do, and absent circumstances that are not present here, also use his own wealth to fund his equity commitment.
- dragonwriter 4y ago
  Yes, the remedy of requiring performance of contract obligations as a cure for breach rather than money damages is called “specific performance”. It has extensive history in general, and considerable history in corporate mergers and acquisitions (including, specifically, in the Delaware Court of Chancery, where this suit is.) Here’s a report of a Court of Chancery case from 2019, for example: https://www.lexology.com/library/detail.aspx?g=a116d0d4-2ca0-414d-8356-8b0343cab60a https://www.lexology.com/library/detail.aspx?g=a116d0d4-2ca0...
  - walrus01 4y ago
    If I recall, suing to require contract performance also occurs at a much smaller scale if buyers or sellers try to back out of a finalized transaction for sales of a house or condo. If they then can't or won't, damages may be applied.
    - jrumbut 4y ago
      The damages are what is limited to $1 billion, but I wonder what the consequences are if specific performance is ordered and Musk just doesn't do it. Can the Court of Chancery put him in jail, does it automatically fall back to the $1 billion, something else?
planarhobbit 4y ago
He’s rich enough to drag this through the court for long enough to bankrupt Twitter, though.
- nocoiner 4y ago
  He’s really not. This case will be tried in the most efficient corporate law court in the country. They make a particular effort to render speedy decisions.
- bandyaboot 4y ago
  First, the notion that Twitter would have difficulty funding extended litigation is just ridiculous. Second, Musk won’t be able to make this a long drawn out process. This court moves quickly and appeals go straight to the State Supreme Court.
- lovich 4y ago
  If that’s true, why does anyone run a business? Deals don’t matter and you might as well hire some guys willing to break your competitors kneecaps rather than engage in due diligence when selling. Elon getting away with walking off this deal unscathed financially is in no one’s best interested but Elon’s
- Ekaros 4y ago
  There is no way this will bankrupt a multi-billion dollar company. And that there isn't someone ready to fund it to keep it running in off-chance of making billions when Musk has to do good for his word.
- anonymousab 4y ago
  The trick is that if Twitter succeeds, then their legal fees become Musk's legal fees by virtue of him owning the company. They are heavily incentivized to go at this as hard and long as possible if they are to go at it at all.
dragonwriter 4y ago
Even recognizing that any one sides filings present an incomplete story, Musk’s public actions alone combined with the terms of the contract as related in the Twitter suit look pretty bad for Musk. Unless he’s got some other line of attack much stronger than the ones he has been publicly previewing, I don’t see how he prevails here.
- zackees 4y ago
  As Musk stated on Twitter, Twitter didn’t hand over the bot data and will have to do so in court to prove its point. I see Musk walking paying nothing, or else a settlement with twitter at a lower price.
  - twoslide 4y ago
    Most views I've heard are that it is quite impossible to force someone to buy a company, but rather there will be settlement to exit the deal.
    - thomassmith65 4y ago
      Musk already bought the company. The issue is whether Twitter can force him to pay.
      - dragonwriter 4y ago
        > Musk already bought the company. No, he didn't. If he did, the company wouldn't be suing him, since he would control it.
        aidanlister 4y ago
        I think you’d correctly say he bought the company but has not settled, so he does not yet own the company.
        4y ago
kazinator 4y ago
A 140-character-long court document ought to be enough to name the plaintiff, the defendant, and the amount of money demanded. Not sure about signatures and court registry stamps.
- scyzoryk_xyz 4y ago
  It will be a thread
  - kibibu 4y ago
    Buckle up! (1/633)
    - deleted 4y ago
      [deleted]
danielmarkbruce 4y ago
https://www.documentcloud.org/documents/22084453-twittermuskcomplaint https://www.documentcloud.org/documents/22084453-twittermusk... It's a nice read. On the surface it looks like Musk is toast.
- WORMS_EAT_WORMS 4y ago
  They both are frauds. Twitter has been fudging for years. Elon being disingenuous about the entire deal. Twitter is arguing in their case “even though we had no reason to, we were still providing your team with everything and all data” while at the same time definitely not doing that. They flat out admit to refusing to share how the sampling was calculated for their mDAU number for the past 5 years. They say “it’s a super secret sauce to our success and Elon said he would start his own Twitter if this deal doesn’t happen and that is why we won’t share it but can share the entirety of Twitter data instead.” Oof. Chop heads at Twitter and fire the lawyers. Don’t have to be a rocket scientist to read between those lines… Just feel bad for the normal every single day employees. If you’re not jumping ship, you are going down whichever way this lawsuit/deal closes.
  - anonymousab 4y ago
    > while at the same time definitely not doing that. Their filling shows that they absolutely did do that. Every time it was requested of them. >They flat out admit to refusing to share how the sampling was calculated for their mDAU number for the past 5 years. They provided several meetings, invitations to meetings, and outright extended breakdowns of exactly how it all works. Musk, for whatever reason, admitted to not even reading any of the information. That's a smoking gun towards the invalidity of his claims, especially about Twitter's cooperation. They were answering all of his requests this whole time, and just letting him run his mouth and lie unopposed on Twitter about them cooperating. I suspect Bob Swan will have a lot to say about the situation if he gets roped in as a witness, and it does not seem like it will be good for Musk.
    - WORMS_EAT_WORMS 4y ago
      > Although Twitter has provided certain summary data regarding the mDAU calculations, Twitter has not provided the complete daily measures as requested. (note this is the last sentence of a footnote buried away in their argument)
yarg 4y ago
It is absolutely staggering what a titanic job Elon has done of obliterating his reputation. I really wish he could just come out and say "sorry guys, I haven't slept in 6 years", coma the fuck out and come back as a sanish man.
- walrus01 4y ago
  I wish that we could apply credit where it's due to the rest of the SpaceX team by name for some of their amazing technical achievements (100+ landings and re use of a falcon 9 first stage) for instance, and let them bask in the glory, rather than musk as a figurehead. On the other hand if musk keeps doing loony shit like this we now have Howard Hughes v2.0.
  - yarg 4y ago
    I don't know what role Musk actually played in design (beyond "it needs to be pointy"), but he absolutely bet the farm on SpaceX. One more rocket-boom and SpaceX and Elon's pocketbook were done for.
    - walrus01 4y ago
      I am familiar with the history that SpaceX almost failed when the falcon 1 failed to work, but I can't say I have a huge amount of sympathy for musk taking an immense risk. I'm sure he had enough money set aside even then from PayPal/x.com that even if SpaceX had gone belly up he could have bought a very nice house somewhere and lived in a very comfortable lifestyle for the rest of a human lifespan just living off the interest from $15-20 million.
      - yarg 4y ago
        I'm sure he had the engineering nous and connections to find his way back from oblivion, but (unless he exaggerated) things we near dire for him financially.
      - ghufran_syed 4y ago
early_exit 4y ago
Given Twitters current valuation, wouldn’t Musk consider any outcome where he pays less than 5B an absolute win?
- CogitoCogito 4y ago
  I presume Musk would consider paying 0 an "absolute win". I kind of doubt he'll achieve that though.
- threeseed 4y ago
  Matt Levine posted an outcome that seems pretty plausible. Twitter settles and buys Musk's shares for $0 worth ~$2.6b at current price. But it would stop Musk strategically dumping the stock and so could be worth much higher to Twitter.
cloutchaser 4y ago
The big question is something that Ben Thompson highlighted yesterday - if the court sides width Twitter, but Elon just refuses to pay, what happens? And Elon definitely believes he can play fast and loose with rules and laws, so it could happen. It's going to be pretty hard for a court to enforce getting financing, and getting the merger through. As far as I understand it this is possible. It could actually destroy the faith in the delaware courts if this happens. So Musk in a way has everyone over a barrel potentially, and everyone has something to lose.
- rich_sasha 4y ago
  In principle he's the same as any other citizen. If you don't do as the court tells you, you're in contempt and can even be held in prison indefinitely if need be. It would be a very interesting test of the US state machinery, which maintains there are no all-powerful oligarchs.
  - cloutchaser 4y ago
    But to just play this game. Lets say he goes to prison until he complies. Are there any banks that would finance this deal then? What if they don't? Is he kept in prison until he sells $44bn worth of tesla shares and pays cash for the deal? It's a pretty interesting thought experiment.
    - rich_sasha 4y ago
      I suspect with him in prison, the court could enforce the sale of his assets. I think the theoretical answer is, yes, the court can physically force cash transfer even if Musk refuses to cooperate. Prison is just a part of it (though I can't see Musk keen to explore that). But then he's got expensive lawyers and so on, to me this is the interesting side of the thought experiment.
    - jorams 4y ago
      The banks are already committed to their part of the financing. The rest has to come from Musk, and the court could force him to come up with it.
hannabaker 4y ago
[flagged]
hannabaker 4y ago
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SilverBirch 4y ago
I think people are overly focused on the legal proceedings here. Obviously the only option Twitter has when it goes to court is to say "Hey, he breached the contract, we want you to force him to comply with the contract" but they don't have to take that line when actually negotiating with Elon Musk. It may well be that Twitter thinks that their case is strong but that the legal proceedings present risk and damage the company's ability to operate in the short term so it's more in their favour to cut a deal where they get some payout from Musk. The only really strong thing I think they'll need (other than cash) is that Musk agrees not to attempt to buy twitter again. The reason I say that is because without the deal TWTR's fair market value is probably in the $20Bn region, and so almost any amount of money they can extract from Musk to walk away would allow him to come back and buy the company cheaper than the current deal - and that would just look absurd for twitter. Say for example they say "give us $10Bn to walk away" Musk could pay that, turn around and offer to buy the company again at $25Bn and probably succeed. So the only real way to protect themselves is to prevent him doing that.
- MrMan 4y ago
  I really don't think he wants to own a controlling interest in Twitter
- threeseed 4y ago
  > walk away would allow him to come back and buy the company cheaper than the current deal That would require the board and shareholders to approve it. Why would they when he's demonstrated an inability to be a safe pair of hands.
- rurp 4y ago
  > The only really strong thing I think they'll need (other than cash) is that Musk agrees not to attempt to buy twitter again. I'm not sure this would really do anything for Twitter. The board isn't required to consider non-serious offers, and I can't imagine anyone taking a takeover offer from Elon seriously ever again, outside of friends and family deals. Not to mention that Elon is now absolutely notorious for violating contracts that he has agreed to. What's to stop him from ignoring an agreement to not offer to by Twitter again?
throwawayffffas 4y ago
Given Musk's history with public announcements of intentions to buy public companies, I wonder what the FTC thinks of all this, and what they are going to do after the verdict. I really think that Musk will be very lucky to get away with just a billion dollars payment to twitter for breach of contract. Oh, and one last thought, if anyone from twitter is reading this, you should definitely ban him.
- collyw 4y ago
  > ban him pathetic, you have a block button, use that if he bothers you so much
- DocTomoe 4y ago
  > you should definitely ban him. "If you rip out a man's tongue, you did not proof him wrong. You just demonstrated to the world that you are afraid of what he might have said." Twitter knew this with Trump - which is why they only kicked him out once he had become harmless. They know this with Musk, who most definitely is not.
- MrMan 4y ago
  He is still very valuable as a draw for Twitter no matter how much direct harm he has done to the company
moh_maya 4y ago
Matt Levine's analysis [1,2] are (imo) good places to get a sense of the issues around this - his commentary on the legal, financial and commercial aspects is illuminating, and entertainingly so. Based on his analysis, it does seem like Musk really has succeeded in shooting himself in the foot. There was a recent decision, again covered by Matt Levine, in the Delaware Chancery, where (from what I can understand), in a similar situation, the Chancery compelled the buyer to complete the purchase, notwithstanding their attempts to exit the agreement [3]. [1] https://www.bloomberg.com/opinion/articles/2022-07-09/elon-s-out https://www.bloomberg.com/opinion/articles/2022-07-09/elon-s... [2] https://www.bloomberg.com/opinion/articles/2022-07-11/the-price-of-not-buying-twitter https://www.bloomberg.com/opinion/articles/2022-07-11/the-pr... [3] https://www.bloomberg.com/opinion/articles/2022-07-12/i-was-told-there-d-be-a-cake-merger https://www.bloomberg.com/opinion/articles/2022-07-12/i-was-...
- mzs 4y ago
  Also Twitter wants to argue this on Sept 19th over just four days. If so, then the decision would easily take less than 6 more months. https://www.bloomberg.com/news/articles/2022-07-13/twitter-seeks-a-quick-trial-soon-to-resolve-suit-against-musk https://www.bloomberg.com/news/articles/2022-07-13/twitter-s...
kisstheblade 4y ago
Musk is clearly in the wrong here (absent any lies in the twitter document, which I would find very unlikely). Musk is acting like a spoiled child. Let's see what happens when a man with infinite resources tries to get what he wants. Has the court system enough muscle to handle this (i.e. Musk hasn't too many "bought" sympathizers in the system).
cykros 4y ago
I saw it suggested elsewhere that for how stupid this all looks, it was a big scheme to give cover of liquidity for the big capital folks (Blackrock, Vanguard, etc) who are also whales in TSLA to get out of TWTR without losing their shirt in the process as the company spirals. The reports of the sale gave them time to get out, and now that they are, Elon is renegging on the deal, and taking the heat for it, but ultimately, due to the benefits to TSLA's share price indirectly, making out fairly okay (or at the very least, gaining a credit for a favor or two from some folks who it's nice to be owed a favor from), even in light of what may be a few billion dollars worth of penalty for the breakup. I won't say I'm subscribing to this idea, but I do find it intriguing, and it does offer a rationale for what otherwise looks like it could be a fairly stupid set of decisions made by someone who at least sometimes hasn't appeared quite so dumb. By all means, pick it apart and tell me why you think it doesn't hold water...just throwing it out there as it's an interesting theory.
- hotpotamus 4y ago
  Yes, this is called "n dimensional chess" (usually 4d chess, but it depends on how silly you feel) theory I believe. It seems to stem from the same instinct that often leads people down the path to conspiracy theories - that reality can't be this stupid. If I've learned anything in my approaching 4 decades of time on earth, it's that reality can in fact be that stupid.
- JamesSwift 4y ago
  Its just wild to me that this multi-dimensional fraud/collusion with many dynamic aspects not under your control (i.e. Twitter and the courts) is somehow more likely (in some peoples estimations) than the _much_ simpler version of "he just changed his mind and likely plans to ignore legal consequences".
- rurp 4y ago
  This feels like a conspiracy theory to me. It would require a lot of secret coordination and motive to pull off, versus the simpler explanation that a rich guy who likes to be an impulsive troll decided to be an even higher profile impulsive troll for a while. Why would Elon torch his reputation just to help some fund managers? Doing it for money doesn't make sense, since he could lose a lot of it here. Also, a huge portion of institutional investments are index funds, which don't make strategic buy/sell decisions.
JamesSwift 4y ago
From a comment I made on a dead thread on this: I've been pretty vocal about thinking Musk's case was flimsy at best on this. After reading through this filing [1], I have to say its even worse. A couple additions to the argument that has occurred on this site and elsewhere: 1. On page 15, Twitter highlights some pretty key clauses in the initial agreement that I didn't see picked up on previously around Material Adverse Effect (MAE) and explicit conditions that _cant_ be counted for it. Specifically they explain how even recession style market changes wont be considered MAE, and scope what might be considered MAE in their SEC filing to very specific statements that dont appear to include the bot number disclosures. 2. They give some behind-the-scenes recounting of specific clauses that were added/removed which make the entire thing much more tenuous in court for Musk. For example Page 12 Paragraph 34 ("Twitter also negotiated for itself a right to hire and fire employees at all levels, including executives, without having to seek Musk’s consent."), Page 12 Paragraph 35 ("Twitter further negotiated to narrow the circumstances under which defendants could escape the deal by claiming a 'Company Material Adverse Effect.'"), Page 12 Paragraph 36 ("Twitter negotiated for itself a robust right to demand specific performance of the agreement’s terms that encompassed the right to compel defendants to close the deal, and ensured that Musk personally was bound by that provision (among others).") 3. On Page 31, they claim they told him they sample 9000 accounts when doing their analysis and Musk then publicly tweeted they sample 100 accounts. If this is true, thats pretty damning for Musk when a court decides if hes just on a fishing expedition. So yeah... I'm admittedly biased and obviously this is one sides language in the filing but.... I don't see a ton of support for Musks case so far. [1] - https://s3.documentcloud.org/documents/22084456/final-verified-complaint.pdf https://s3.documentcloud.org/documents/22084456/final-verifi...
- encryptluks2 4y ago
  I've said it once before, but I fully expect Musk at some point in the lawsuit to suggest that he had a psychological condition and that it excuses his behavior.
  - cato_the_elder 4y ago
    No, that won't happen, and what he's doing is quite rational given the tech stock meltdown. Even if you have a very small chance of winning, taking your chances with a court might have a positive expected value since billions of dollars are at stake.
stevage 4y ago
My take: Elon is a brilliant engineer and businessman who has made the mistake of thinking he can outwit the law as well. Typical overreach. And now he's about to hit the brick wall.
- rchaud 4y ago
  Certainly not typical by any means. Has there been a case in modern business history when someone shot themselves in the foot this brazenly to the tune for $40bn? Usually it's failed hedge funds operating in the shadows that manage to lose this much in a rapid market downturn.

129 points by rurp 4y ago

dools 4y ago

d3nj4l 4y ago
If the court finds for Musk, why would he have to pay?
- dools 4y ago
  Yes meant to say funds for twitter
Galaxity 4y ago
Except that Musk can't legally be president.
sn0w_crash 4y ago
Musk is much more powerful in his current position. Also he was not born in the US and cannot run.
- himinlomax 4y ago
  You don't actually have to be born IN the US. See John McCain. But Musk still can't run.
  - deidei 4y ago
    > Musk still can't run Can you please explain this?
    - Ekaros 4y ago
      USA president must be older than 35 and natural born citizen. That is born either on the soil of USA or to parent who is citizen at the time of birth.
  - ngc248 4y ago
    McCain was born in the panama canal control zone and at that point the panama canal control zone was controlled by the US.
nocoiner 4y ago
I assume you’re being tongue in cheek (especially given Musk being constitutionally unable to run for president), but the president of the United States doesn’t appoint judges to the Delaware Court of Chancery. And that court is amazingly efficient, effective and incredibly incorruptible.
- undersuit 4y ago
  Aww darn, Musk doesn't have 6 years of Delaware residency, because becoming Governor of Delaware is probably a lot easier than amending the US constitution to allow a non-native citizen of the US to become president.

AzzieElbab 4y ago

How is this supposed to end well? Imagine Twitter wins the lawsuit…

nocoiner 4y ago
Not too difficult to image at all - EM draws upon the contractually committed financing he presented to the Twitter board (the bulk of which is coming out of his own fortune) and does what he agreed to do: but Twitter for $44 billion. Just like the merger agreement says. If Twitter wins the suit, EM will be in exactly the place he bargained to be in when he signed the merger agreement: the proud new owner of Twitter.
- perilunar 4y ago
  who promptly fires everyone at Twitter who was involved in the lawsuit?
  - janosett 4y ago
    The people involved in the lawsuit that Twitter won will not likely have trouble finding another job. That will be a career triumph!
  - mlyle 4y ago
    I think Musk was probably gonna fire a whole lot of management team in his original plan. They're not worse off...
  - square_usual 4y ago
    Those people don't work at Twitter; they're board members.
- TheSpiceIsLife 4y ago
  EM interference.
dragonwriter 4y ago
That would be ending well, from the perspective of Twitter’s current stockholders.

phendrenad2 4y ago

Wow, it really does ask the court to force Elon to find financing and buy the company. I wonder if there's precedent here.

nocoiner 4y ago
EM already HAS committed financing. Now, he can probably blow up the commitment from his banks by continuing to engage in egregiously bad faith behavior, but under the merger agreement and the financing commitment papers, he’s required to draw on that committed debt. And, if the debt shows up like it is contractually obligated to do, and absent circumstances that are not present here, also use his own wealth to fund his equity commitment.
dragonwriter 4y ago
Yes, the remedy of requiring performance of contract obligations as a cure for breach rather than money damages is called “specific performance”. It has extensive history in general, and considerable history in corporate mergers and acquisitions (including, specifically, in the Delaware Court of Chancery, where this suit is.) Here’s a report of a Court of Chancery case from 2019, for example: https://www.lexology.com/library/detail.aspx?g=a116d0d4-2ca0-414d-8356-8b0343cab60a https://www.lexology.com/library/detail.aspx?g=a116d0d4-2ca0...
- walrus01 4y ago
  If I recall, suing to require contract performance also occurs at a much smaller scale if buyers or sellers try to back out of a finalized transaction for sales of a house or condo. If they then can't or won't, damages may be applied.
  - jrumbut 4y ago
    The damages are what is limited to $1 billion, but I wonder what the consequences are if specific performance is ordered and Musk just doesn't do it. Can the Court of Chancery put him in jail, does it automatically fall back to the $1 billion, something else?

planarhobbit 4y ago

He’s rich enough to drag this through the court for long enough to bankrupt Twitter, though.

nocoiner 4y ago
He’s really not. This case will be tried in the most efficient corporate law court in the country. They make a particular effort to render speedy decisions.
bandyaboot 4y ago
First, the notion that Twitter would have difficulty funding extended litigation is just ridiculous. Second, Musk won’t be able to make this a long drawn out process. This court moves quickly and appeals go straight to the State Supreme Court.
lovich 4y ago
If that’s true, why does anyone run a business? Deals don’t matter and you might as well hire some guys willing to break your competitors kneecaps rather than engage in due diligence when selling. Elon getting away with walking off this deal unscathed financially is in no one’s best interested but Elon’s
Ekaros 4y ago
There is no way this will bankrupt a multi-billion dollar company. And that there isn't someone ready to fund it to keep it running in off-chance of making billions when Musk has to do good for his word.
anonymousab 4y ago
The trick is that if Twitter succeeds, then their legal fees become Musk's legal fees by virtue of him owning the company. They are heavily incentivized to go at this as hard and long as possible if they are to go at it at all.

dragonwriter 4y ago

Even recognizing that any one sides filings present an incomplete story, Musk’s public actions alone combined with the terms of the contract as related in the Twitter suit look pretty bad for Musk. Unless he’s got some other line of attack much stronger than the ones he has been publicly previewing, I don’t see how he prevails here.

zackees 4y ago
As Musk stated on Twitter, Twitter didn’t hand over the bot data and will have to do so in court to prove its point. I see Musk walking paying nothing, or else a settlement with twitter at a lower price.
- twoslide 4y ago
  Most views I've heard are that it is quite impossible to force someone to buy a company, but rather there will be settlement to exit the deal.
  - thomassmith65 4y ago
    Musk already bought the company. The issue is whether Twitter can force him to pay.
    - dragonwriter 4y ago
      > Musk already bought the company. No, he didn't. If he did, the company wouldn't be suing him, since he would control it.
      - aidanlister 4y ago
        I think you’d correctly say he bought the company but has not settled, so he does not yet own the company.
        4y ago

kazinator 4y ago

A 140-character-long court document ought to be enough to name the plaintiff, the defendant, and the amount of money demanded. Not sure about signatures and court registry stamps.

scyzoryk_xyz 4y ago
It will be a thread
- kibibu 4y ago
  Buckle up! (1/633)
  - deleted 4y ago
    [deleted]

danielmarkbruce 4y ago

https://www.documentcloud.org/documents/22084453-twittermuskcomplaint https://www.documentcloud.org/documents/22084453-twittermusk... It's a nice read. On the surface it looks like Musk is toast.

WORMS_EAT_WORMS 4y ago
They both are frauds. Twitter has been fudging for years. Elon being disingenuous about the entire deal. Twitter is arguing in their case “even though we had no reason to, we were still providing your team with everything and all data” while at the same time definitely not doing that. They flat out admit to refusing to share how the sampling was calculated for their mDAU number for the past 5 years. They say “it’s a super secret sauce to our success and Elon said he would start his own Twitter if this deal doesn’t happen and that is why we won’t share it but can share the entirety of Twitter data instead.” Oof. Chop heads at Twitter and fire the lawyers. Don’t have to be a rocket scientist to read between those lines… Just feel bad for the normal every single day employees. If you’re not jumping ship, you are going down whichever way this lawsuit/deal closes.
- anonymousab 4y ago
  > while at the same time definitely not doing that. Their filling shows that they absolutely did do that. Every time it was requested of them. >They flat out admit to refusing to share how the sampling was calculated for their mDAU number for the past 5 years. They provided several meetings, invitations to meetings, and outright extended breakdowns of exactly how it all works. Musk, for whatever reason, admitted to not even reading any of the information. That's a smoking gun towards the invalidity of his claims, especially about Twitter's cooperation. They were answering all of his requests this whole time, and just letting him run his mouth and lie unopposed on Twitter about them cooperating. I suspect Bob Swan will have a lot to say about the situation if he gets roped in as a witness, and it does not seem like it will be good for Musk.
  - WORMS_EAT_WORMS 4y ago
    > Although Twitter has provided certain summary data regarding the mDAU calculations, Twitter has not provided the complete daily measures as requested. (note this is the last sentence of a footnote buried away in their argument)

yarg 4y ago

It is absolutely staggering what a titanic job Elon has done of obliterating his reputation. I really wish he could just come out and say "sorry guys, I haven't slept in 6 years", coma the fuck out and come back as a sanish man.

walrus01 4y ago
I wish that we could apply credit where it's due to the rest of the SpaceX team by name for some of their amazing technical achievements (100+ landings and re use of a falcon 9 first stage) for instance, and let them bask in the glory, rather than musk as a figurehead. On the other hand if musk keeps doing loony shit like this we now have Howard Hughes v2.0.
- yarg 4y ago
  I don't know what role Musk actually played in design (beyond "it needs to be pointy"), but he absolutely bet the farm on SpaceX. One more rocket-boom and SpaceX and Elon's pocketbook were done for.
  - walrus01 4y ago
    I am familiar with the history that SpaceX almost failed when the falcon 1 failed to work, but I can't say I have a huge amount of sympathy for musk taking an immense risk. I'm sure he had enough money set aside even then from PayPal/x.com that even if SpaceX had gone belly up he could have bought a very nice house somewhere and lived in a very comfortable lifestyle for the rest of a human lifespan just living off the interest from $15-20 million.
    - yarg 4y ago
      I'm sure he had the engineering nous and connections to find his way back from oblivion, but (unless he exaggerated) things we near dire for him financially.
    - ghufran_syed 4y ago

early_exit 4y ago

Given Twitters current valuation, wouldn’t Musk consider any outcome where he pays less than 5B an absolute win?

CogitoCogito 4y ago
I presume Musk would consider paying 0 an "absolute win". I kind of doubt he'll achieve that though.
threeseed 4y ago
Matt Levine posted an outcome that seems pretty plausible. Twitter settles and buys Musk's shares for $0 worth ~$2.6b at current price. But it would stop Musk strategically dumping the stock and so could be worth much higher to Twitter.

cloutchaser 4y ago

The big question is something that Ben Thompson highlighted yesterday - if the court sides width Twitter, but Elon just refuses to pay, what happens? And Elon definitely believes he can play fast and loose with rules and laws, so it could happen. It's going to be pretty hard for a court to enforce getting financing, and getting the merger through. As far as I understand it this is possible. It could actually destroy the faith in the delaware courts if this happens. So Musk in a way has everyone over a barrel potentially, and everyone has something to lose.

rich_sasha 4y ago
In principle he's the same as any other citizen. If you don't do as the court tells you, you're in contempt and can even be held in prison indefinitely if need be. It would be a very interesting test of the US state machinery, which maintains there are no all-powerful oligarchs.
- cloutchaser 4y ago
  But to just play this game. Lets say he goes to prison until he complies. Are there any banks that would finance this deal then? What if they don't? Is he kept in prison until he sells $44bn worth of tesla shares and pays cash for the deal? It's a pretty interesting thought experiment.
  - rich_sasha 4y ago
    I suspect with him in prison, the court could enforce the sale of his assets. I think the theoretical answer is, yes, the court can physically force cash transfer even if Musk refuses to cooperate. Prison is just a part of it (though I can't see Musk keen to explore that). But then he's got expensive lawyers and so on, to me this is the interesting side of the thought experiment.
  - jorams 4y ago
    The banks are already committed to their part of the financing. The rest has to come from Musk, and the court could force him to come up with it.

hannabaker 4y ago

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hannabaker 4y ago

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SilverBirch 4y ago

I think people are overly focused on the legal proceedings here. Obviously the only option Twitter has when it goes to court is to say "Hey, he breached the contract, we want you to force him to comply with the contract" but they don't have to take that line when actually negotiating with Elon Musk. It may well be that Twitter thinks that their case is strong but that the legal proceedings present risk and damage the company's ability to operate in the short term so it's more in their favour to cut a deal where they get some payout from Musk. The only really strong thing I think they'll need (other than cash) is that Musk agrees not to attempt to buy twitter again. The reason I say that is because without the deal TWTR's fair market value is probably in the $20Bn region, and so almost any amount of money they can extract from Musk to walk away would allow him to come back and buy the company cheaper than the current deal - and that would just look absurd for twitter. Say for example they say "give us $10Bn to walk away" Musk could pay that, turn around and offer to buy the company again at $25Bn and probably succeed. So the only real way to protect themselves is to prevent him doing that.

MrMan 4y ago
I really don't think he wants to own a controlling interest in Twitter
threeseed 4y ago
> walk away would allow him to come back and buy the company cheaper than the current deal That would require the board and shareholders to approve it. Why would they when he's demonstrated an inability to be a safe pair of hands.
rurp 4y ago
> The only really strong thing I think they'll need (other than cash) is that Musk agrees not to attempt to buy twitter again. I'm not sure this would really do anything for Twitter. The board isn't required to consider non-serious offers, and I can't imagine anyone taking a takeover offer from Elon seriously ever again, outside of friends and family deals. Not to mention that Elon is now absolutely notorious for violating contracts that he has agreed to. What's to stop him from ignoring an agreement to not offer to by Twitter again?

throwawayffffas 4y ago

Given Musk's history with public announcements of intentions to buy public companies, I wonder what the FTC thinks of all this, and what they are going to do after the verdict. I really think that Musk will be very lucky to get away with just a billion dollars payment to twitter for breach of contract. Oh, and one last thought, if anyone from twitter is reading this, you should definitely ban him.

collyw 4y ago
> ban him pathetic, you have a block button, use that if he bothers you so much
DocTomoe 4y ago
> you should definitely ban him. "If you rip out a man's tongue, you did not proof him wrong. You just demonstrated to the world that you are afraid of what he might have said." Twitter knew this with Trump - which is why they only kicked him out once he had become harmless. They know this with Musk, who most definitely is not.
MrMan 4y ago
He is still very valuable as a draw for Twitter no matter how much direct harm he has done to the company

moh_maya 4y ago

Matt Levine's analysis [1,2] are (imo) good places to get a sense of the issues around this - his commentary on the legal, financial and commercial aspects is illuminating, and entertainingly so. Based on his analysis, it does seem like Musk really has succeeded in shooting himself in the foot. There was a recent decision, again covered by Matt Levine, in the Delaware Chancery, where (from what I can understand), in a similar situation, the Chancery compelled the buyer to complete the purchase, notwithstanding their attempts to exit the agreement [3]. [1] https://www.bloomberg.com/opinion/articles/2022-07-09/elon-s-out https://www.bloomberg.com/opinion/articles/2022-07-09/elon-s... [2] https://www.bloomberg.com/opinion/articles/2022-07-11/the-price-of-not-buying-twitter https://www.bloomberg.com/opinion/articles/2022-07-11/the-pr... [3] https://www.bloomberg.com/opinion/articles/2022-07-12/i-was-told-there-d-be-a-cake-merger https://www.bloomberg.com/opinion/articles/2022-07-12/i-was-...

mzs 4y ago
Also Twitter wants to argue this on Sept 19th over just four days. If so, then the decision would easily take less than 6 more months. https://www.bloomberg.com/news/articles/2022-07-13/twitter-seeks-a-quick-trial-soon-to-resolve-suit-against-musk https://www.bloomberg.com/news/articles/2022-07-13/twitter-s...

kisstheblade 4y ago

Musk is clearly in the wrong here (absent any lies in the twitter document, which I would find very unlikely). Musk is acting like a spoiled child. Let's see what happens when a man with infinite resources tries to get what he wants. Has the court system enough muscle to handle this (i.e. Musk hasn't too many "bought" sympathizers in the system).

cykros 4y ago

I saw it suggested elsewhere that for how stupid this all looks, it was a big scheme to give cover of liquidity for the big capital folks (Blackrock, Vanguard, etc) who are also whales in TSLA to get out of TWTR without losing their shirt in the process as the company spirals. The reports of the sale gave them time to get out, and now that they are, Elon is renegging on the deal, and taking the heat for it, but ultimately, due to the benefits to TSLA's share price indirectly, making out fairly okay (or at the very least, gaining a credit for a favor or two from some folks who it's nice to be owed a favor from), even in light of what may be a few billion dollars worth of penalty for the breakup. I won't say I'm subscribing to this idea, but I do find it intriguing, and it does offer a rationale for what otherwise looks like it could be a fairly stupid set of decisions made by someone who at least sometimes hasn't appeared quite so dumb. By all means, pick it apart and tell me why you think it doesn't hold water...just throwing it out there as it's an interesting theory.

hotpotamus 4y ago
Yes, this is called "n dimensional chess" (usually 4d chess, but it depends on how silly you feel) theory I believe. It seems to stem from the same instinct that often leads people down the path to conspiracy theories - that reality can't be this stupid. If I've learned anything in my approaching 4 decades of time on earth, it's that reality can in fact be that stupid.
JamesSwift 4y ago
Its just wild to me that this multi-dimensional fraud/collusion with many dynamic aspects not under your control (i.e. Twitter and the courts) is somehow more likely (in some peoples estimations) than the _much_ simpler version of "he just changed his mind and likely plans to ignore legal consequences".
rurp 4y ago
This feels like a conspiracy theory to me. It would require a lot of secret coordination and motive to pull off, versus the simpler explanation that a rich guy who likes to be an impulsive troll decided to be an even higher profile impulsive troll for a while. Why would Elon torch his reputation just to help some fund managers? Doing it for money doesn't make sense, since he could lose a lot of it here. Also, a huge portion of institutional investments are index funds, which don't make strategic buy/sell decisions.

JamesSwift 4y ago

From a comment I made on a dead thread on this: I've been pretty vocal about thinking Musk's case was flimsy at best on this. After reading through this filing [1], I have to say its even worse. A couple additions to the argument that has occurred on this site and elsewhere: 1. On page 15, Twitter highlights some pretty key clauses in the initial agreement that I didn't see picked up on previously around Material Adverse Effect (MAE) and explicit conditions that _cant_ be counted for it. Specifically they explain how even recession style market changes wont be considered MAE, and scope what might be considered MAE in their SEC filing to very specific statements that dont appear to include the bot number disclosures. 2. They give some behind-the-scenes recounting of specific clauses that were added/removed which make the entire thing much more tenuous in court for Musk. For example Page 12 Paragraph 34 ("Twitter also negotiated for itself a right to hire and fire employees at all levels, including executives, without having to seek Musk’s consent."), Page 12 Paragraph 35 ("Twitter further negotiated to narrow the circumstances under which defendants could escape the deal by claiming a 'Company Material Adverse Effect.'"), Page 12 Paragraph 36 ("Twitter negotiated for itself a robust right to demand specific performance of the agreement’s terms that encompassed the right to compel defendants to close the deal, and ensured that Musk personally was bound by that provision (among others).") 3. On Page 31, they claim they told him they sample 9000 accounts when doing their analysis and Musk then publicly tweeted they sample 100 accounts. If this is true, thats pretty damning for Musk when a court decides if hes just on a fishing expedition. So yeah... I'm admittedly biased and obviously this is one sides language in the filing but.... I don't see a ton of support for Musks case so far. [1] - https://s3.documentcloud.org/documents/22084456/final-verified-complaint.pdf https://s3.documentcloud.org/documents/22084456/final-verifi...

encryptluks2 4y ago
I've said it once before, but I fully expect Musk at some point in the lawsuit to suggest that he had a psychological condition and that it excuses his behavior.
- cato_the_elder 4y ago
  No, that won't happen, and what he's doing is quite rational given the tech stock meltdown. Even if you have a very small chance of winning, taking your chances with a court might have a positive expected value since billions of dollars are at stake.

stevage 4y ago

My take: Elon is a brilliant engineer and businessman who has made the mistake of thinking he can outwit the law as well. Typical overreach. And now he's about to hit the brick wall.

rchaud 4y ago
Certainly not typical by any means. Has there been a case in modern business history when someone shot themselves in the foot this brazenly to the tune for $40bn? Usually it's failed hedge funds operating in the shadows that manage to lose this much in a rapid market downturn.