Twitter’s lead counsel William Savitt came out swinging against Musk at the start of the hearing as he argued in favor of a speedy trial. Savitt said the continued uncertainty hanging over the company from the outstanding deal and litigation “inflicts harm on Twitter everyday, every hour and every day.” He also pointed to what he described as Musk’s continued disparagement of Twitter, including on its own platform.
“Musk has been and remains contractually obligated to use his best efforts to close this deal,” Savitt said. “What he’s doing is the exact opposite; it’s sabotage.”
Even with this scheduling dispute, the stakes are high for Twitter. The company was already struggling to grow its user base and advertising business before Musk’s involvement, and now it and many other tech companies are pulling back on costs amid rampant inflation and fears of a recession. Twitter needs a swift resolution to the battle with Musk in order to limit the uncertainty for its shareholders, employees and customers, and any fallout for its business that could be exacerbated by costly, prolonged litigation.
“There may be hints from what she asks and what she says, and what they say, during the hearing that may tell us something,” said Carl Tobias, a professor at the University of Richmond School of Law.
The case has already hit a small snag: While the hearing was originally scheduled to take place in-person, McCormick sent a letter to the two parties on Monday alerting them that she tested positive for Covid-19 and would be moving the hearing to Zoom.
Twitter asked the court to compel Musk to complete the deal to buy the company. While many legal experts say Twitter likely has the stronger argument in the dispute, some also expect the company may end up settling with the billionaire if the case starts to drag on, in an effort to reduce the disruption to its business.
As with the dispute generally, Twitter and Musk appear far apart on whether to have a speedy trial. In its motion, Twitter said the expedition is necessary to ensure the deal can be completed prior to the “drop dead” date of October 24 that the two sides previously agreed to close the deal by, and to “protect Twitter and its stockholders from the continuing market risk and operational harm resulting from Musk’s attempt to bully his way out of an airtight merger agreement.”
In a Friday court filing, Musk’s lawyers called Twitter’s request an “extreme expedition” and claimed that the dispute is “extremely fact and expert intensive, requiring substantial time for discovery.” They also claimed that the original agreement stipulated that drop-dead date would no longer apply if one party filed litigation over the deal, calling Twitter’s request “moot,” and asked that the trial be scheduled for on or after February 13, 2023.
Twitter’s lawyer on Tuesday pushed back on Musk’s team’s claim that the discovery process would take months because it would require digging into the details related to the number of bot and fake accounts on the platform. The bot question is “emphatically and plainly not before the court in this case,” Savitt said.
“Nothing in the merger agreement turns on that question, there is no representation or warranty in the merger that is related to how many false accounts there may be on Twitter,” Savitt said. He added that “Musk could have conducted diligence about this issue” prior to signing the deal but did not.
McCormick likely will not decide on whether to expedite the proceedings during the hearing Tuesday, according to Tobias, but rather will consider both sides’ arguments and how long it could take to prepare for trial, including producing discovery and coordinating expert testimony, and then issue a decision at a later date.
“I think she’s going to try to work toward something that is reasonable in light of the complexity” of the dispute, Tobias said. “This court has a great reputation for resolution of this kind of litigation, and so she’ll be especially careful to give [both sides] the best treatment possible.”
Despite Musk’s move to terminate the deal, “we are committed to closing the merger on the price and terms agreed upon with Mr. Musk,” the Friday letter states. “Your vote at the special meeting is critical to our ability to complete the merger.”
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