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Trial for Lawsuit between Elon Musk and Twitter in October Ordered by Judge

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Twitter’s early victory was confirmed by a Tuesday judge who ruled that Elon Musk’s lawsuit against the company over their $44 Billion acquisition agreement should be heard in October.

The motion was rejected by Musk’s legal team. The motion was opposed by Musk’s legal team. Tuesday’s hearing featured both sides’ sharply phrased arguments — with Twitter’s lawyer once referring to Musk in a “committed enemies” — setting the scene for what is almost certain, a contentious legal fight.

At the beginning of the hearing, William Savitt twitter’s lead counsel threw his weight behind Musk and argued for a speedy trial. Savitt stated that the uncertainty surrounding the company’s outstanding contract and litigation “inflicts damage on Twitter every hour and day”. He also referred to Musk’s ongoing disparagement of Twitter and its platform.

Savitt stated that Musk was contractually bound to make every effort to close the deal. “What he is doing is exactly the opposite, it’s sabotage.”

Musk’s lawyer, Andrew Rossman, argued that the billionaire “doesn’t have a motive to keep this hanging for a long period,” given that Musk is still one of Twitter’s major shareholders. He also pointed out that the company did not sue Musk for claimed violations of the agreement until after he tried to cancel it, implying that the company’s hesitation negated its need for speed. (In her comments, the court stated that Twitter’s timing was not “unreasonable.”)

Musk’s team suggested that the dispute be tried in court early next year. Rossman stated, “We are not opposed to expedition full stop, and we’re certainly not asking for many years here.” “What we offer instead, Your Honour, is an extremely rapid and sensible schedule.”

After each side’s arguments, Kathaleen St. Jude McCormick (Delaware Court of Chancery chancellor) said that Musk’s side “underestimates the court’s ability to quickly process complex litigation.”

McCormick announced the scheduling plan, “The truth is that delay threatens irreparable damage [to Twitter] the longer you delay, the greater your risk.” While most cases are not worthy of a trial lasting more than five days, McCormick said that she would consider any request from either side to prolong the trial if necessary.

Twitter was in a high-stakes situation even with the scheduling dispute. Before Musk’s involvement, the company was already having trouble growing its advertising business and user base. Now it and other tech companies are cutting back on costs due to rampant inflation and fears about a recession. Twitter must quickly resolve the Musk battle to protect its customers, shareholders, and employees. It also needs to minimize any potential fallouts for its business, which could be worsened by expensive, long-running litigation.

Even though Tuesday’s hearing was mostly procedural, it provided a glimpse into how each side might approach the likely messy litigation process. This may give a hint as to the approach of the judge in the case.

Carl Tobias, a professor in the University of Richmond School of Law, said that there may be clues from her questions and her answers.

McCormick has sent a letter Monday to both parties advising them that McCormick had tested positive for Covid-19, and she would be moving the hearing to Zoom.

Three months after the blockbuster acquisition agreement was signed, Musk decided to end that agreement. Musk accused Twitter of violating the agreement by misleadingly stating the number of spam and bot accounts on the platform and withholding data Musk claims he needs in order to assess the severity of the problem.

Twitter responded last week with a 60-page lawsuit claiming that Musk has broken the agreement. Twitter claimed that Musk used bots to attempt to terminate a deal. This was in response to the market downturn which has dragged down Twitter shares and those of Tesla ( TSL ), on which the billionaire relies.

Rossman called Tuesday’s suggestion that Musk’s concerns over bots were a pretext for exiting the deal “nonsense.”

Rossman stated, “We have reason [based on what has been seen so far] to believe that the real number [of bots/fake accounts on Twitter] is significantly greater than Twitter has publicly disclosed, which could have enormous implications for long-term values of the company.” He said that Twitter’s claim that Musk has violated the deal is “fabricated to deny Mr. Musk his rights to terminate the agreement.”

Twitter asked the court for Musk’s order to close the deal to purchase the company. Many legal experts believe that Twitter has the strongest argument in the dispute. However, others expect that the company will settle with Musk if the case drags on. This is to minimize disruption to the company’s business.

Twitter and Musk disagreed on the merits of a speedy trial, as was the case in general. Twitter stated that an expedition was necessary in order to complete the deal before the “drop dead date” of October 24, which the parties had previously agreed to. It also said it needed to “protect Twitter’s stockholders against the ongoing market risk and operational harm caused by Musk’s attempts to force a merger agreement to be closed.”

Twitter is continuing to make the necessary steps to complete the acquisition. According to a regulatory filing, the company sent shareholders a Friday letter inviting them to vote for the deal to sell Twitter and Musk for $54.20 per share. The special meeting will take place at an undisclosed time and date later in the year. The board of Twitter had previously unanimously recommended that shareholders vote for the deal. This position was reiterated in the letter.

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