Tesla’s billionaire CEO is currently fighting several legal battles.
Autumn promises to be busy for Elon Musk.
From the end of September, Musk will be doing everything not to disappoint fans of the electric vehicle manufacturer during the second edition of Tesla AI (Artificial Intelligence) day. He moved the event from August 19 to September 30, because he intends to present a humanoid robot almost ready to be marketed.
“Tesla AI Day pushed to Sept 30, as we may have an Optimus prototype working by then,” the billionaire tweeted to his 102 million followers on June 2
The Twitter Trial
Once this test passes, Musk begins a perilous month with potential repercussions on Tesla. In October, the trial over Twitter is planned. Musk withdrew his offer to acquire the microblogging website for $44 billion earlier this month, sparking a huge legal battle.
After three turbulent months, marked by a public drama, the entrepreneur threw in the towel accusing Twitter of bad faith on the number of fake accounts, or spam bots, existing on the platform. Yet one of the reasons Musk gave when he announced his offer on April 14 was to tackle the problem of fake accounts.
The social-media platform filed a lawsuit in Delaware Chancery Court, asking the judge to force Musk to keep his commitment to acquire the company. Twitter had asked for an expedited trial, set for mid-September. Musk asked the court to set Feb. 13, 2023, as the earliest trial date.
Chancellor Kathaleen McCormick granted the first victory, a major one, to Twitter. In a July 19 teleconference, McCormick ruled for an expedited hearing, which will take place over five days in October. Twitter argued that it wanted a fast-track trial because the merger agreement between the two parties provides that if the deal is not finalized before Oct. 24, either of the two parties can terminate it free of charge.
Besides Twitter, Musk now also has another legal deadline, starting October 3. A settlement conference is scheduled for this date in the case of a lawsuit filed in California by investors who say they suffered losses from the tweets posted by the billionaire in August 2018 saying that he planned to Tesla private.
Settlement Talks in the 2018 Tweets Case
“You are hereby notified that a settlement conference is scheduled for October 3, 2022 at 10:00 a.m. Pacific Time which shall be held via Zoom video conference,” say court documents, updated July 22, addressed to plaintiffs’ and Musk’s attorneys and viewed by TheStreet.
The judge also asks the two parties to talk to each other beforehand in order to improve the prospects for a settlement. They must discuss six items, including who will attend the conference on behalf of each party, which persons or entities must approve a proposed settlement agreement, and whether it would be useful for settlement demands and/or offers to be made before the settlement conference is convened.
“No later than fourteen (14) calendar days before the settlement conference and prior to the preparation of their exchanged settlement conference statements and confidential settlement letters, counsel for the parties must meet and confer (in person or by phone) to discuss matters pertinent to improving the prospects that the settlement negotiations will be productive,” the documents stipulate.
Alex Spiro, one of Musk’s lawyers from law firm Quinn Emanuel, told TheStreet that this settlement conference is a court request.
This latest development suggests however that there has been significant progress in this case, which is based on the now infamous tweet sent on August 7, 2018 by the chief executive officer. That day Musk had written that he wanted to withdraw Tesla from the stock market at a price of $420 per share. Above all, he added that he had secured the financing for such a transaction.
“Am considering taking Tesla private at $420. Funding secured,” Musk wrote.
The Securities and Exchange Commission (SEC) opened an investigation which resulted in a settlement in September 2018. Under the agreement, Musk would step down as chairman of Tesla’s board of directors, pay a $20 million fine, and Tesla would also pay a $20 million penalty. Tesla also committed to pre-approve Musk’s tweets that could have a potential impact on the stock.
Some shareholders decided to attack Musk in court by regrouping around a class-action, filed with the U.S. District Court for the Northern District of California in San Francisco. They believe that they were wronged by Musk’s tweet, and, above all, they claim that Musk lied by saying he had the necessary funds to finance the transaction.
On April 15, Californian judge Edward Chen said that Musk’s statements were false. The judge concluded that Musk acted with “scienter”, which means that he knowingly made false statements about having funding secured when he tweeted.
“Nothing will ever change the truth which is that Elon Musk was considering taking Tesla private and could have,” Spiro told TheStreet at the time. “All that’s left some half decade later is random plaintiffs lawyers trying to make a buck and others trying to block that truth from coming to light all to the detriment of free speech.”
A trial is scheduled for January if there is no agreement between the two parties.