U.S. Markets closed
  • S&P 500

    3,934.38
    -29.13 (-0.73%)
     
  • Dow 30

    33,476.46
    -305.02 (-0.90%)
     
  • Nasdaq

    11,004.62
    -77.39 (-0.70%)
     
  • Russell 2000

    1,796.66
    -21.63 (-1.19%)
     
  • Crude Oil

    71.59
    +0.13 (+0.18%)
     
  • Gold

    1,809.40
    +7.90 (+0.44%)
     
  • Silver

    23.68
    +0.43 (+1.87%)
     
  • EUR/USD

    1.0545
    -0.0014 (-0.1371%)
     
  • 10-Yr Bond

    3.5670
    +0.0760 (+2.18%)
     
  • Vix

    22.83
    +0.54 (+2.42%)
     
  • GBP/USD

    1.2250
    +0.0012 (+0.0980%)
     
  • USD/JPY

    136.5700
    -0.0600 (-0.0439%)
     
  • BTC-USD

    17,156.39
    -63.51 (-0.37%)
     
  • CMC Crypto 200

    402.11
    -4.14 (-1.02%)
     
  • FTSE 100

    7,476.63
    +4.46 (+0.06%)
     
  • Nikkei 225

    27,901.01
    +326.58 (+1.18%)
     

Twitter v. Musk judge says the trial is still on

In a new letter filed with Delaware's Court of Chancery, Judge Kathaleen McCormick says it's still game on — for now at least.

In the letter, sent a day after news broke that Elon Musk would seek to seal the deal with Twitter under the original terms, Judge McCormick is weighing in with an important observation: The trial will still move forward unless either party does something to formally change that.

"The parties have not filed a stipulation to stay this action, nor has any party moved for a stay," Judge McCormick wrote. "I, therefore, continue to press on toward our trial set to begin on October 17, 2022."

The bulk of the letter explores Twitter's concern about "allegedly deficient production of text messages and other instant messages to and from Elon Musk." In other words, Twitter thinks that some key conversations were not turned over in last week's trove of Musk's texts with a laundry list of Silicon Valley hotshots. So, Twitter wants to compel the billionaire to cough up all relevant messages from January 1 to July 8. Twitter went so far as to accuse Musk of intentionally deleting or withholding "damaging messages.” Judge McCormick heard arguments about this specific subset of the broader drama on September 27.

Apparently, this includes messages that may have been sent over encrypted messaging apps.

"With respect to Signal, Plaintiff argues that Musk sent or received Signal messages during the relevant period and that their deletion or non-production amounts to sanctionable spoliation," McCormick writes. She goes on to order Musk's team to provide a complete copy of his phone records in a format that's easier to search and sort.

Judge McCormick also orders the Musk camp to produce a set of 19 texts between Musk and his lawyer Alex Spiro — the same lawyer who received an anonymous tip from a Twitter insider through ProtonMail. She also mentions some texts between Musk and Oracle founder Larry Ellison coordinating to set up a call, and the timing lines up with Musk's announcement that the deal was "temporarily on hold."

There are still even more holes in the communications that Musk's team handed over, Judge McCormick wrote.

"Defendants have produced no Musk text messages between May 24 and May 30, nor between June 1 and June 7. These periods were important to the parties’ dispute, and I share Plaintiff’s concern that Musk produced no responsive text messages from these periods," she writes, noting that Musk uses other chat services including Signal, particularly for "personal financial matters."

"With respect to Signal, Plaintiff argues that Defendants’ failure to produce Signal messages (other than one screen shot discussed below) raises an inference that Musk deleted relevant messages that he was obligated to preserve," McCormick writes.

Third-party discovery found that Elon Musk had corresponded with investor Marc Andreessen via Signal as well -- the venture capitalist had contacted Musk on April 25 with interest in becoming an equity partner in Twitter. When Twitter's team found out that Musk was talking about major elements of the deal via Signal, they pointed out that this makes it seem more likely that other key conversations were happening on the encrypted app too.

Musk said in an affidavit that he didn't recall using the Signal app to talk about the deal in any instance other than his conversation with Andreessen. But discovery revealed yet another instance of Musk using Signal to talk to his advisor, Jared Birchall. It isn't clear when these relatively routine Signal messages were sent, but it's suspicious enough that Judge McCormick said it "seems unlikely" that these two exchanges were the only times Musk used the app.

"At this stage, it is unclear to me whether deletions occurred when Defendants were under a duty to preserve documents," McCormick wrote. "If Defendants deleted documents after they were under a duty to preserve, some remedy is appropriate, but the appropriate remedy is unclear to me at this stage."

Since the evidence is not yet clear, McCormick will not rule on this matter until a pending post-trial briefing.

Musk's lawyer says he's never spoken to Mudge, the Twitter whistleblower

In his second termination notice to Twitter, Musk leveraged whistleblower complaints from Twitter's former head of security Peiter "Mudge" Zatko to justify pulling out of the deal. Like Musk, Zatko claims that Twitter is hiding information from its investors.

Twitter's lawyers theorized that Zatko may have anonymously contacted Musk's lawyer, Alex Spiro, in a mysterious, anonymous email sent on May 6, which was found in discovery. McCormick has said that because Musk relies heavily on new revelations from Zatko, Twitter has the right to figure out if he had any prior contact with Musk or Musk’s team that hasn’t come to light.

Shortly after Judge McCormick filed her letter today, Musk's lawyer Alex Spiro submitted a two-page affidavit addressing these concerns.

In the affidavit, Spiro declares that he does not recall reading the May 6 email when he received it, since he gets so many anonymous emails about Twitter on a weekly basis.

"It is not my habit to review those emails, and the May 6 Email did not stand out in any way," Spiro wrote. "Reading it now, the May 6 Email appears to be from an individual looking to 'Support [] Elon's Twitter Transition' by asking for a job."

Spiro said that he didn't reply, forward, print, save or communicate with anyone about the email. To date, he says he has not attempted to reach out to the person behind the email.

"I can confirm that I have never met or communicated with Mr. Zatko, nor did I communicate with Mr. Zatko through any sort of intermediary," Spiro added. "I had no knowledge of the existence of his whistleblower complaint, or the allegations therein, prior to August 23, 2022."

As of now, Judge McCormick has ruled that Twitter can continue searching for evidence of contact between Zatko and Musk's team. The Musk camp is also expected to provide any requested documents on the matter by Friday.

Why Musk's sudden change of heart?

It came as a surprise to many yesterday when Elon Musk suddenly backtracked months of legal sparring to say that he's just going to pay up and buy Twitter. But this swerve isn't as random a decision as it seems.

In his letter to Twitter, filed with the SEC, Musk says that he’ll proceed with buying Twitter as promised, but only if the Chancery Court will “adjourn the trial and all other proceedings related thereto pending such closing or further order of the Court.”

Twitter thinks Elon Musk is hiding something. Musk won't prove that he's not hiding anything. What does a trial do? It makes you reveal what you're hiding, under oath. If Musk really was using Signal to talk about making this deal and backing out of it, then it wouldn't be a stretch to believe there's something he doesn't want Twitter or Judge McCormick to know. However, Musk has been known to change his mind often, and since the reasoning behind his actions is not transparent, there could be other elements at play.

Elon Musk was supposed to be scheduled for deposition last week, but he was able to delay the trial, citing a potential COVID-19 exposure. If nothing massive changes, Musk's deposition will now take place on Thursday and Friday, meaning that he will have to give testimony. But if he is that adamant that he doesn't want to try his luck under oath, then... prepare for some end-of-week chaos.