Closing Arguments in Musk-Twitter Lawsuit
The closing arguments wrapped up on Tuesday in the legal battle involving Elon Musk and Twitter shareholders. They accuse Musk of misleading investors while trying to exit a $44 billion acquisition deal for the platform back in 2022.
This civil case in San Francisco revolves around a class-action lawsuit initiated just before Musk took over Twitter Inc., which was later renamed X, in October 2022. This purchase, priced at $54.20 per share, amounts to a small portion of Musk’s vast wealth, which is currently around $839 billion.
During the trial, a significant point of discussion was Musk’s statements about bots on Twitter. He asserted that the number of fake accounts on the platform was much higher than the 5% indicated in official filings. Musk used this claim as a basis to withdraw from the agreement.
After Musk’s initial attempt to back out, Twitter filed a lawsuit in Delaware to enforce the original deal. However, right before the trial commenced, Musk agreed to fulfill his initial promise and proceed with the purchase.
Plaintiffs’ attorney Mark Molanphy urged jurors to find Musk liable and provide compensation to the many investors who lost money due to Musk’s tweets, particularly one stating that the deal was “pending” on May 13, 2022.
“He knew what he was doing,” Molanphy asserted.
The plaintiffs suggested that as Tesla’s shares dipped and the Twitter acquisition became more costly for Musk, he tweeted in a way that depressed Twitter’s stock. They argued his statements were not just careless but strategically aimed at lowering the purchasing price or escaping the deal entirely.
In response, Musk’s attorney, Michael Rifrak, argued that the plaintiffs had not offered any concrete evidence that Musk intentionally tried to manipulate Twitter’s stock value. He pointed out that according to jury guidelines, proving intent or motive for fraud is not enough to establish that fraud actually took place.
Rifrak also noted that there was “zero evidence” that the decline in Tesla’s stock had impacted the Twitter acquisition proceedings. He remarked that the motivation to pay less does not equate to fraud.
During this time, Twitter had faced its own troubles, including a settlement of $809.5 million in 2021 over claims of inflating user growth figures. Musk claimed that the number of bots was much more significant, at least 20%, describing it as obvious, likening it to saying “the grass is green and the sky is blue.”
However, Twitter’s former CFO, Ned Segal, contested Musk’s assertion, stating that the actual figure was closer to 1%. Segal denied that Twitter had ever made false statements to the SEC about its spam accounts but acknowledged an error in reporting its daily user count in 2017.
Molanphy presented tweets Musk had sent prior to agreeing to the acquisition, including one from 2020 expressing concerns over the number of fake accounts. Musk had previously admitted in court that he believed Twitter had “exaggerated” its user figures before the deal.
In discussing Musk’s May 13 tweet about the deal being “pending,” his attorney Rifrak employed visual aids to show that it shouldn’t be regarded as false. He highlighted that jurors needed to discern the difference in how people interpret tweets, suggesting that hostility towards Musk shouldn’t influence their judgment.
“He might tweet something foolish,” Rifrak acknowledged. “But this isn’t a trial about that.” Instead, he argued it was about whether Musk had engaged in securities fraud, stressing the necessity of proving such claims.
Both parties convened on Monday to discuss jury instructions. Judge Charles R. Breyer acknowledged that some jurors might hold unfavorable views of Musk, yet emphasized that even individuals deemed “unpopular” are entitled to a fair trial without bias.
Moreover, Musk has expressed concerns about the fairness of the proceedings, recently filing a motion for a miscarriage of justice, claiming both the plaintiffs and certain actions of the judge had compromised his right to a fair trial.
