With contributions from Matt O’Brien and the Associated Press
A judge ruled on Wednesday that Elon Musk will have the ability to include new evidence from a Twitter whistleblower in his fight to get out of his $44 billion deal to buy the social media company, but that Musk will not have the ability to delay a high-stakes trial that is scheduled to take place in October over the disagreement.
Musk’s demand to postpone the trial for an additional four weeks was turned down by the head judge of Delaware’s Court of Chancery, Chancellor Kathaleen St. Jude McCormick. Peiter Zatko, the former head of security at Twitter, is expected to testify before Congress the following week about the company’s inadequate cybersecurity procedures. However, she gave permission for the billionaire CEO of Tesla to include evidence related to whistleblower allegations made by Zatko.
Twitter has filed a lawsuit against Musk, seeking a Delaware court to compel him to carry out the terms of the agreement he struck in April to purchase the firm. Musk has filed a countersuit, and the court proceeding is scheduled to begin the week of October 17.
Musk’s legal team has argued that the allegations made by Zatko to U.S. officials may help to strengthen Musk’s assumptions that Twitter misled him and the public about just the industry’s conundrum with counterfeit and “spam” account names. Musk has claimed that Twitter hoodwinked him and the government about the company’s problem with fake and “spam” accounts. Zatko, a well-known cybersecurity expert also known by his hacker handle ” Mudge,” stated that he was sacked in January after raising red flags regarding Twitter’s neglect in preserving the safety and confidentiality of its users. Zatko is better known by his hacker handle.
The judge’s decision came after a hearing that lasted for several hours on Tuesday, during which the attorneys representing Musk and Twitter fought with each other about the validity of Zatko’s accusations and the rate at which both sides are accumulating evidence in preparation for the trial.
An initial 27-page complaint that Zatko sent to Twitter and a later retaliation claim made no mention of the “spam bot” issues that Musk has given as a reason to terminate the deal, so the attorneys for Twitter attempted to downplay the relevance of Zatko’s allegations to the merger dispute. They argued that this was evidence that Zatko’s allegations were not relevant to the dispute. William Savitt, an attorney for Twitter, stated that prior to Zatko’s whistleblower report in July, the former employee “never mentioned a word about spam or bots.”
Musk’s stated reasons for backing out were just a cover for buyer’s remorse, according to Twitter, which has argued for weeks that Musk’s stated reasons were just a cover for buyer’s remorse after agreeing to pay 38% above Twitter’s stock price shortly before the stock market stumbled and shares of the electric-car maker Tesla, where most of Musk’s personal wealth resides, lost more than $100 billion in their value. Twitter has argued that Musk’s stated reasons
The judge, McCormick, stated on Wednesday that the newly released whistleblower complaint provided grounds for Musk’s team to revise their countersuit; but, she declined to comment further on the specifics of the case.
She stated, “I am cautious to say more concerning the merits of the counterclaims at this posture before they have been fully litigated.” “I am reticent to say more concerning the merits of the counterclaims at this posture.” “Everyone in the world will have to hold their breath until the post-trial verdict is announced.”
McCormick, on the other hand, shared Twitter’s concerns and agreed that postponing the trial would make it more difficult for the company to get back to business as usual.
According to what she wrote, she was “convinced that even a four-week wait would risk more harm to Twitter that is too significant to justify.”
During the afternoon session of trading, Twitter’s share price increased by 5.5%, reaching $40.77.