The chancery court is intimately familiar with disputes involving mergers and acquisitions. Over the last two decades, it has ruled in disputes such as when a dissident shareholder fought a merger of the computer companies HP and Compaq in 2002; when the chemical company Hexion sued to end its merger with another chemical company, Huntsman, in 2008; and when the luxury companies LVMH Moët Hennessy Louis Vuitton and Tiffany Company sued each other over an acquisition in 2020.
What happens once a case lands in Chancery Court?
Most cases in the Court of Chancery typically follow the same process, similar to most civil courts in other states. Both sides may file a motion for summary judgment, which means they ask the court to rule on all or parts of the case without going to trial. If the case goes to trial, the judge determines the facts based on evidence provided through records and testimonies, then rules on the resolution.
The chancellor, Kathaleen McCormick, appoints herself or one of the six vice chancellors to preside over the case. If a chancellor has a conflict of interest — for example, having worked for Mr. Musk or Twitter in the past — he or she cannot preside. Cases are then decided by the presiding judge and not a jury, though the judge can call an advisory jury to help consult. The judge’s decision can be appealed to the State Supreme Court, whose decision is final.
Have Mr. Musk and Twitter had cases heard in Chancery Court?
Yes.
In 2016, Mr. Musk’s auto company, Tesla, announced a $2.6 billion acquisition of the solar panel energy company SolarCity. Tesla shareholders sued to prevent the deal from going forward, a case that landed in Delaware’s Court of Chancery. The shareholders accused Mr. Musk of pushing Tesla’s board to effectively bail out the struggling SolarCity, which the billionaire’s cousins had founded. The court ruled in Mr. Musk’s favor in April, a decision that has been appealed to the state’s Supreme Court.
Twitter has also dealt with the court in several cases, including a lawsuit filed in May by a police pension fund in Orlando, Fla., to delay the deal with Mr. Musk. In 2020, Twitter shareholders also sued the company in Chancery Court, accusing executives of inflating user statistics. The court approved a $38 million settlement last year.
Article source: https://www.nytimes.com/article/musk-twitter-delaware-court-chancery.html
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