5 ms·
Twitter Complaint Demonstrates That Every Lawyer Is Smarter Than Musk
- AnimalMuppet 4y agoW O W. This is what happens when you think you're the smartest guy in the room, and it's not your room.
- torstenvl 4y agoThe WSJ has a very different take: https://archive.ph/DKex6 https://archive.ph/DKex6 The ATL blog post from Joe Patrice seems to hinge its argument on two things: (a) specific performance is a major threat and "one expects that someone will prevail upon Musk to settle before that happens" (emphasis in original); and (b) due diligence was waived so Musk doesn't have a leg to stand on (Patrice is "flummoxed by Musk’s theory that he’ll ever see this data in court [because h]e waived diligence"). That's a weak argument. Specific performance is drastic, and arguably unconstitutional in many contexts (albeit not this one most likely), so courts almost never order it. Additionally, waiving due diligence doesn't grant the seller free rein to provide material misrepresentations. If Twitter is making a claim about how many actual human users it has (which it is doing by providing the number of users and saying 5% or less are bots), and that claim is materially false, that's the ballgame. (AboveTheLaw tends to be long on cheerleading and snark, and short on legal analysis, particularly when an issue presents itself as GenZ fan faces versus The Establishment, something you can see by reading their many other articles.) (Disclaimer: IAAL but IANAMAL. My comment here has a modicum of insight over a random layman but is emphatically not the opinion of an expert or practitioner in this particular field.)
- dragontamer 4y ago> The WSJ has a very different take: https://archive.ph/DKex6 https://archive.ph/DKex6 Your link has nothing to do with any statement you made.
- torstenvl 4y agoYou're right, sorry. I can't edit it now but this is the WSJ link I meant to post. https://archive.ph/HsGyY https://archive.ph/HsGyY
- seanhunter 4y agoNot only do courts order specific performance but the exact judge hearing this case ordered specific performance in a merger where the purchaser attempted to pull out claiming a material adverse change.
- TigeriusKirk 4y ago>"one expects that someone will prevail upon Musk to settle before that happens" My question is "Settle how?" Pay a penalty and still not own Twitter? That seems like an unlikely outcome to me. Why would he do that? Why would he not simply complete the transaction instead?
- abracadaniel 4y agoIf the options are to pay $50b for something worth $20b, or pay $1b and walk away, then walking away is the better choice by far.
- AnimalMuppet 4y agoYeah, but I don't think those are his choices. Pay $1b and walk away is his best outcome. That's if he wins. If he loses, he may have to pay $50b for something worth $20b. Settling will be somewhere in between - maybe paying $10-15b to walk away. Of course, if he settles, it will be with a sealed agreement. And then he can publicly claim victory...
- pengaru 4y ago> Pay $1b and walk away is his best outcome. That's if he wins. No, his best out come if he wins is he pays nothing because Twitter lied about what they're selling.
- dragontamer 4y agoExcept Elon Musk went to Twitter with a seller-friendly request and signed away his right to due diligence. Twitter never "lied" about anything. Heck, they barely negotiated anything at all. Elon Musk arrived, bought 9% of the company (and had a number of SEC violations while doing so since he didn't file various forms in time), and then threatened to enter into a hostile takeover of Twitter.
- pengaru 4y ago
- anotherman554 4y agoSpecific performance is perfectly constitutional in this matter, and you don't seem to understand that Twitter's representations were highly qualified, making it seemingly impossible for Musk to show there were material misrepresentations. You seem to be under the misapprehension that Twitter claimed there were 5% or less bots. This is not true. They never made unqualified claims about the number of bots. How do I know this? I subscribe to Matt Levine's newsletter. He's a lawyer who follows this stuff for a living.
- Kon-Peki 4y ago> AboveTheLaw tends to be long on cheerleading and snark, and short on legal analysis, particularly when an issue presents itself as GenZ fan faces versus The Establishment, something you can see by reading their many other articles. That would be a major change from the old days. Back before Gen Z was old enough to get a job, ATL was a blog run by a woman named Ellie. It was aimed specifically at BigLaw associates and was total snark all day, everyday. If you saw something there you didn’t see elsewhere, there was a 99% chance it was inside info from one of the associates on the case.
- dragonwriter 4y ago> Specific performance is drastic, and arguably unconstitutional in many contexts Specific performance is not all drastic (and not remotely arguably unconstitutional) in the case of agreements to transmit specific tangible or intangible property. It is impermissible, and often argued further to be a violation of the 13th Amendment, for personal services contracts, but that’s not even remotely at issue here. Now, arguably, since Musk’s end of the deal was to pay cash while Twitter’s end was to provide specific property, you can make the case that specific performance cannot be justified because Twitter can be made whole by a damage award, to wit, via compensatory damages equal to the difference between the amount of money Musk offered and the value of 100% of Twitter stock at the time damages are assessed. > If Twitter is making a claim about how many actual human users it has (which it is doing by providing the number of users and saying 5% or less are bots), and that claim is materially false, that’s the ballgame. That’s rather imprecisely worded (aside from also drastically factually misrepresenting the content of Twitter’s bot-related claims), and resolving that sloppiness in a way that is tolerably approximately true (aside, again, from the misrepresentation of what Twitter has actually claimed), “materially” is doing a lot of work in that sentence.
- roughly 4y agoAlso, to be clear, Twitter is not making a claim about how many actual human users it has - it is making a claim about how many actual human mDAU, or monetizable daily active users, it has. 90% of Twitter's users can be bots, as long as no more than half a percent or so of those are counted as mDAU.
- tveita 4y ago> Twitter can be made whole by a damage award, to wit, via compensatory damages equal to the difference between the amount of money Musk offered and the value of 100% of Twitter stock at the time damages are assessed. This sounds difficult to assess - the possibility of damages being awarded should itself be affecting the stock price. E.g. if you were 100% assured of a payout of $52.40 - stock price, the stock should trade for $52.40... but then the damages would be $0.
- 4y ago
- favorited 4y agoOnly a handful of judges have ever forced reluctant buyers to close on an acquisition. One of them is Judge Kathaleen McCormick, the chancellor assigned to hear Twitter's case against Musk. https://bdnews24.com/world/americas/2022/07/15/judge-in-twitter-v.-musk-made-rare-ruling-ordering-a-deal-to-close https://bdnews24.com/world/americas/2022/07/15/judge-in-twit...
- eli 4y agoThis makes it sound like the judge is an outlier. The situation doesn't come up very often. Most people who sign binding agreements to buy something intend to buy it. The face that she previously dealt with it is funny though.
- jmalicki 4y agoI mean it's not completely random, this is exactly the kind of thing the Delaware chancery court exists to deal with... almost all of their docket is high-stakes shareholder stuff.
- deleted 4y ago[deleted]
- TechBro8615 4y agoI learned a long time ago that doubting Musk is about as safe a bet as doubting Bill Belichick’s draft choices. Somehow, he always ends up winning, even when it looks like he might lose. But who knows, maybe this time will be different. I doubt it though. I don’t understand why people think involvement of the court system spells the beginning of the end for Musk. On the contrary, it’s a $44 billion deal (for now lol); when it comes to negotiation, the courtroom is part of the battlefield. Just a few months ago, the Twitter board was refusing Musk’s bid to buy Twitter and even discussed a poison pill to stop a hostile takeover. Now, that same board is taking Musk to court, trying to force him to buy Twitter. So who is really losing here? And who is in control of the situation? btw, has anyone seen @jack lately? I think he and Musk might be up to something.
- maxbond 4y agoDo you feel the outcome of his attempt to take Tesla private was Musk "winning"? I'm genuinely asking, and not being glib.
- TechBro8615 4y agoHis net worth has multiplied by a high number since then, largely thanks to the performance of Tesla stock. I don’t see any way to interpret that other than “winning,” if we’re measuring the result of his past decisions regarding Tesla or its financials.
- maxbond 4y agoI don't think we should measure the outcome of this incident by Tesla's stock performance in the years since, that doesn't really make sense. I never heard someone make a bull case for Tesla like, "in 2018, the CEO said he may take the company private, so it's a buy." That he was sued by the SEC and had to give up his chairmanship in the settlement seem like much more relevant ways to judge the outcome of this particular event, to me. This standard ought to work in reverse too, right? If he was winning from 2018 to the end of 2021 because Tesla stock was skyrocketing, surely he's been losing since the beginning of the year as the stock has been plummeting. Otherwise, we would have defined "winning" in a way where "losing" is impossible, which would be a meaningless exercise, wouldn't you say? If you believe that Tesla's poor stock performance since the beginning of the year isn't per say Musk's fault, it's just the market environment, I'd agree with you. But the same is true, at least in part, of Tesla's bull run. It coincided with a broader bull run in the market and tech stocks in particular.
- betwixthewires 4y agoWe see this time and time again. Some big controversial thing happens between entities that nobody fully understands, and a million Very Intelligent® analysts and columnists with every pertinent qualification and a good vocabulary of ten dollar words tries to tell us that yes, they are qualified to predict what will happen and you should just take their word for it. And predictably, people just pick whatever set of sentences they like the sound of and parrot them endlessly. And, surprisingly more predictably, the outcome is never what any of them said. Could musk lose? Yes. But I guarantee you, the final reasoning of the ruling will differ significantly from any of these people's analysis. You're basically flipping a coin as to who ends up right. How many things like this have happened over the past decade? How many of those oft touted analysts were right? Being generous, it's significantly less than half, which means they're worse predictors of outcomes than a coin flip. And how many of us picked a side, parroted our favored talking points, selectively remember how things played out and reinforce our misled world views? And here we go, all ready to do it again. The truth is, this case is going to play out how it is going to play out, none of us know really what's going to happen, it's mostly inconsequential to us and it's all basically just sportsball.
- Imnimo 4y ago>But Twitter obviously owes it to its shareholders to demand the full $40-some-odd billion rather than settling for the $1B alternative relief — though given Musk’s antics, it’s probably in the best interests of the shareholders to take less and keep Musk’s hands away from the rudder. I don't understand this. If Musk buys the company for $40B, then what do the current shareholders care whether he does a bad job of running it? They won't be shareholders anymore! They'll have gotten their $52.40 per share and will have no more (financial) interest in whether Twitter does well or not. Have I misunderstood the situation somehow?
- staticman2 4y agoYeah that part made no sense to me either.
- kareemsabri 4y agoPresumably they mean that on net the shareholder would accrue value > $40B if they got some cash as a penalty, and continued to own a Musk-free Twitter. Bit of a throwaway line though.
- quantified 4y agoFor those shareholders that are bought out, you're right. He could squeeze their buildings and infrastructure into a giant paperweight and lay off everyone after middle-fingering the world in a final tweet, and those shareholders would have their cash and no say or care about it. After all, according to SCOTUS, the cash they get is their sole concern. The shareholders who go private with him, may care, but that's between them and him. Interesting if they would go against the merger. If you get in bed with Musk, expect some procreation, I guess.
- deleted 4y ago[deleted]
- erichocean 4y agoCan someone explain to my why, if it's such a slam-dunk that Delaware will force Musk to pay $54.20/share for Twitter in October, why the current share price is just $37.74? Musk's purchase price is a 43.6% gain over the current price. Based on the comments here on HN (and everywhere else), that's the world's easiest trade. So, what's up? The market seems to be acting like it's not a slam dunk, yet every reporter, HN commenter, Twitter user, etc. believes that it is. Shouldn't people be buying Twitter stock like crazy? Something doesn't add up…
- runnerup 4y agoDiscounts of future money vs present money. Even if it was 100% chance of 43% upside, how long will this take? If it stays in court for 4 years like some Oracle cases and you expect to make 9% per year nominally on your existing portfolio strategy, there’s no motivation to switch strategies.
- daydream 4y ago> Can someone explain to my why, if it's such a slam-dunk that Delaware will force Musk to pay $54.20/share for Twitter in October, why the current share price is just $37.74? Because the market (aka investors) doesn’t believe it’s a slam-dunk that Delaware will force Musk to pay $54.20/share for Twitter in October. The share price hasn’t been anywhere near the deal price recently. Thus far the market’s skepticism about this deal closing has been right.
- globalreset 4y agoPeople with money on the line actually know that people writing for these newspapers are clueless and not worth listening to. Unlike HN readers who keep posting and upvoting this stuff.
- sudosysgen 4y agoDid you read the article? It says that by far the likeliest outcome is actually a settlement.
- sudosysgen 4y ago
- quantified 4y agoMusk has somewhat of a psychology-distorting field around him that changes how intelligence works. Maybe that extends to a court of law. Let's see.