here with more insight on this is brian Quinn professor
at boston College law school brian, can you just
break down this lawsuit and exactly what twitter is accusing
Elon musk. Sure. So twitter filed this lawsuit
just a couple of days ago and in the lawsuit
they alleged that must really had some buyer's remorse following
purchase of the twitter of twitter when they signed the
contract. So their argument is basically that when the
stock when when the stock market and Tesla stock price
declined that made that made twitter much more expensive for
musk and he decided to look for a pretext to
walk away from the deal and they point to his
information demands with respect to bots as merely just a
pretext to just walk and not do the deal.
So they're suing in Delaware and they're asking for what's
called specific performance in order from the court to force
must to complete the transaction. Alright, this is
clearly the very beginning of what could be a long
lengthy legal battle. So breakdown where we go from
here now that their suit is official. Can twitter
really force must to hold up his end of this
deal I guess to your point there, you know
under that that that clause in the law. Yeah
. So uh twitter has already filed what's called a
motion to expedite that's going to put this litigation on
a fast track in Delaware, that means that this
litigation can take about a year, which in the
world of business litigation is really fast. Um so
from start to finish if they litigate this to the
end, it's about a year. Uh and they're
looking for specific performance, which would be an order
from the court to get him to complete the transaction
, which courts in Delaware haven't have granted in the
past in the, in the last couple of years
even. Uh, so it's not outside the realm
of the possible that if they win uh that the
court would order must to complete the transaction. A
bit of an interesting detail in this case. I
think for the average person, is that the,
this is filed in a Delaware Court of Chancery,
a century old court in Delaware. Can you break
down a little bit why the lawsuit was filed here
? What the significance, um, you know that
this court has, I think if you're not a
business person that you don't fully understand that, like
most companies are incorporated, Delaware, this seems interesting
in the small state of Delaware having all this exposure
in this moment right now to this case, right
. It's cases like this that give Delaware it's time
in the sun. Uh So the Court of Chancery
in Delaware is a court that hears mostly complex business
transaction cases. Uh, why? Well, 60%
or more of publicly traded corporations are incorporated in the
state of Delaware? And when a, when a
company incorporates in the state, they elect to use
that state's corporate law to govern their internal governance and
issues with respect to merger are certainly uh, an
issue of internal governance with the corporation. So they're
subject to Delaware law and the proper venue for litigating
or resolving these disputes are in the courts in Delaware
. So, Delaware, here's lots of cases like
this involving corporations incorporated in the state and parties doing
transactions involving the corporate law of Delaware. Yeah,
I think it's just fascinating people get to learn a
little bit about that. And the reality of Delaware
, playing such a big role in a lot of
publicly traded companies because of the way that it favors
kind of those inc status is moving beyond that though
. What I find is another interesting detail that a
lot of people have been talking about on the last
day or two, is that even if the courts
, you know, force him, so to speak
or order that he buys the company, What happens
if Elon musk refuses to comply with the court's order
? Right, So that's an interesting question. So
, typically, uh, parties comply with the,
with the orders of the court. So it's not
the kind of thing that happens a lot, but
it does happen that parties don't comply. We've seen
that recently with chinese corporations incorporated in Delaware and,
and litigation related to chinese corporations. At which point
the Delaware courts have, you know, a host
of powers, uh, equal powers that they can
, they can rely on. So, for example
, uh, they can seize assets of any of
any person who's sub to their jurisdiction, if those
assets are in Delaware. So, for example,
they can seize the assets of, uh, of
perhaps Tesla, I'm sorry, the, the Tesla
stock that that musk has in order to compel him
to appear in front of the court so he can't
simply thumb his nose and walk away and pretend like
Delaware doesn't exist because his other corporations that he,
that he's involved with our Delaware corporations and the court
can order the directors of those corporations to seize,
seize the stock and turn it over to the Delaware
courts until he appears. So they have considerable,
uh, power to compel him to comply. And
even beyond that, they can, uh, the
court can order a Receivership, they can take over
a company, a Delaware company. And it could
also use tools of civil contempt from what you see
here. Cause I think, to be fair,
I think I'm focusing a little bit more on the
twitter side of things, but I want to pivot
just really quickly to the Elon musk side of things
. What, how strong is his argument? Do
you think there is some valid legal ground for him
to say no, I, I can back out
of this deal. It wasn't what I thought.
Yeah, So it's gonna be hard. Um,
when he did this deal, I mean, obviously
, he's gonna have his opportunity, the fact that
we've seen alleged in the complaint are the facts as
alleged by the plaintiff, by twitter. He and
his lawyers are gonna have their opportunity to present their
facts that they think are important. So when we
look at this case right now, we want to
just take that into consideration. But as the facts
are alleged right now, uh, it all the
facts seem to line up against him with respect to
the claims that he's making, uh, he did
this deal waving due diligence, he did this deal
. Understanding that bots were a problem. Indeed bots
were one of the primary motivations to do the transaction
. I mean he thought he thought at least he
told people that he would be able to take care
of the box. So now coming in after he
signed and pointing to the box is a problem and
a reason not to do the deal seems a little
bit disingenuous and hard to swallow Brian. I am
actually over time but really quickly like 15 seconds here
, have you ever seen anything like this where court
potentially will force one company or one owner of one
company to buy another. Yes, we've seen it
in the, in the recent past. KK are
forced to purchase deco pack just last year. Awesome
brian. Such great insight, really appreciate it.
We got to have you back as this case just
continues to develop brian Quinn Professor at boston College law
school. Thank you so much