A Delaware court has denied billionaire Elon Musk’s attempt to push back the October trial over his abortive Twitter acquisition, but it agrees that he can incorporate claims made by former Twitter security chief Peiter “Mudge” Zatko into his case.
The decision follows a hearing yesterday afternoon that saw Musk’s attorneys argue for a “meager” few weeks to review new information before the trial’s October 17th start date. Twitter, meanwhile, accused Musk of trying to drag out the trial and “sow chaos” with more document requests — claiming at one point that its lawyers had been forced to pause responding to international law enforcement requests.
Chancellor Kathaleen McCormick said that Musk should be granted wide latitude to amend claims before the trial starts, overruling Twitter’s objections, although she said she was “reticent to say more concerning the merits of the counterclaims” before the litigation. Musk and Twitter will negotiate on “limited” discovery of new documents related to Zatko’s allegations, which include a variety of claims about poor management at Twitter as well as assertions that executives lied about the number of bots on the platform. In a statement, Musk attorney Alex Spiro lauded the decision. “We are hopeful that winning the motion to amend takes us one step closer to the truth coming out in that courtroom,” said Spiro.
“The company has been forced for months to manage under the constrains of a repudiated merger agreement”
However, McCormick said that Twitter would be unduly harmed by a delay in the trial — which Musk had initially pushed to schedule next year. “The company has been forced for months to manage under the constrains of a repudiated merger agreement,” wrote McCormick. “I am convinced that even four weeks’ delay would risk further harm to Twitter too great to justify.”
Musk’s attorneys had sought to broaden a request for Slack messages, and McCormick granted a slight expansion, ordering Twitter to produce messages from Silver Lake co-CEO Egon Durban and Twitter general counsel Vijaya Gadde on top of six existing people. But she was unconvinced by an ask for 42 people — something Musk’s attorneys said they’d wanted all along, but Twitter characterized as a sudden delay tactic. “Defendants gave [Twitter] the impression that they were seeking limited Slack custodians, only to then say that they never meant it. In this highly expedited case, there is no time for ‘just kiddings,’” wrote McCormick.
The overall ruling is consistent with McCormick’s earlier push for a fast trial, but the decision to allow the whistleblower’s claims strengthens Musk’s case — albeit in ways that aren’t necessarily fatal to Twitter. Musk initially said he suspended the deal because he’d discovered a far larger number of bots on the platform than he expected, but at the trial, he’s likely to argue that Twitter concealed “material adverse effects” potentially beyond the scope of bots, thanks to Zatko’s disclosures.
Meanwhile, Twitter has subpoenaed a wide range of Musk allies and argued that Musk got cold feet that have nothing to do with bots. At the hearing, it pointed to a text message urging his banker to “slow down” the deal for a few days while evaluating a speech by Russian President Vladimir Putin. “It won’t make sense to buy Twitter if we’re heading into World War 3,” Musk said. The two sides will likely continue arguing over exactly what information they’ll need to hand over — but thanks to today’s decision, we won’t be waiting long to see it.
Update 10:45AM ET: Added statement from Musk’s attorney.
Update 6:30PM ET: Added additional ruling on Slack messages.