Twitter Lawsuit Against Elon Musk: Judge Made Rare Ruling

Business & Marketing, Technology & AI

The judge who is in charge of Twitter Inc.’s $44 billion lawsuit against Elon Musk is known for being tough, and he or she is also one of the few judges who has ever forced a reluctant buyer to close a U.S. corporate merger, reports Reuters.

Last year, Kathaleen McCormick became the first woman to be chancellor or chief judge of the Court of Chancery. She was given the Twitter lawsuit against Musk on Wednesday. The lawsuit wants to force Musk to finish his deal for the social media platform, and it looks like it will be one of the biggest legal battles in years.

Adam Badawi, a law professor at the University of California Berkeley who specializes in corporate governance, said, “She already has a track record of not putting up with some of the worst behavior we see in these areas when people want out of deals.” “She is a strict judge who doesn’t take nonsense.”

She is known for being soft-spoken, friendly, and easy to talk to, but she also stands her ground. Musk, on the other hand, is known for being rude and impulsive. She tries to get lawyers to treat each other with respect and be honest at legal conferences.

This year, she told a group at the University of Delaware, “We’ve always had each other’s backs. We’ve always gone out for drinks after fights and kept this level of civility.”

Musk said on Friday that he was ending the deal to buy Twitter for $54.20 per share, which was worth $44 billion. This came after weeks of tweets that suggested Twitter was hiding the real number of fake accounts. Tuesday, the social media site filed a lawsuit.

Legal experts and court records show that only a few times have judges forced buyers who didn’t want to go through with corporate acquisitions. McCormick was one of them.

Last year, McCormick got the attention of Wall Street dealmakers when it told an affiliate of private equity firm Kohlberg & Co LLC to close its $550 million purchase of DecoPac Holding Inc, which makes products for decorating cakes.

She said that her decision was “a win for deal certainty” and disagreed with Kohlberg’s claim that it could back out because it didn’t have enough money.

The case is a lot like the Twitter deal in many ways. Like Musk, Kohlberg said it was leaving because DecoPac had broken the agreement to merge. Like Musk, Kohlberg said that DecoPac didn’t keep doing business as usual.

Also, there are differences. Musk’s deal is much bigger, involves a publicly traded target company (Twitter), and might affect Tesla Inc, which makes electric cars and is where most of Musk’s money comes from.

In other situations, when shareholders fought with management, she sided with the shareholders.

Last year, she stopped the energy company The Williams Cos Inc from using a so-called “poison pill” to stop a takeover. She said that doing so went against their duty to shareholders.

Last month, she said that Carvana Co. shareholders could sue the board for selling stock directly to a few investors when the price of shares was low during the early pandemic. McCormick started her career with the Delaware branch of the Legal Aid Society, which helps low-income people deal with the court system. She went to law school at Notre Dame.

During her confirmation hearing, she told the Delaware Senate that she went into private practice “mostly for financial reasons.” She joined Young Conaway Stargatt & Taylor, one of the most important business litigation firms in the state.

She became a vice chancellor on the Court of Chancery in 2018 and was the first woman to lead the Court of Chancery in 2018. Even though she seems calm, Eric Talley, a corporate law expert at Columbia Law School, said he doesn’t think McCormick would be scared off by Musk.

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