UNITED STATES: A judge has dismissed a proposed class action lawsuit against Elon Musk, alleging that the billionaire defrauded Twitter shareholders multiple times last year during the acquisition of the social media company for $44 billion.
In a ruling on Monday, U.S. District Judge Charles Breyer in San Francisco determined that the plaintiff, William Heresniak, lacked the necessary legal standing to file the lawsuit. Judge Breyer explained that Heresniak contested the wrongs associated with Musk’s buyout rather than the fairness of the buyout itself.
The judge further stated that Heresniak failed to demonstrate any harm caused by Musk’s delayed disclosure of his 9.2% Twitter holding, which allowed him to acquire additional shares at lower prices before the buyout announcement. Additionally, there was no evidence indicating that Musk aided two friends, Twitter co-founder Jack Dorsey and Silver Lake managing partner Egon Durban, in breaching their fiduciary obligations by prioritizing their interests and Musk’s interests.
Judge Breyer noted that the conversion of Dorsey’s Twitter shares into an equity investment in the new company only reduced the amount Musk had to pay at the closure, without diverting funds improperly from other shareholders.
Heresniak’s attorneys have not responded to requests for comment outside of business hours. Elon Musk, the second-richest person in the world and CEO of Tesla Inc. (TSLA.O), as per Forbes magazine, was the target of the lawsuit.
In a court document filed on March 3, Heresniak’s allegations were described as “a disjointed laundry list of – often irrelevant – grievances against Elon Musk.”
Heresniak filed the lawsuit on May 25, 2022, one month after Twitter approved Musk’s buyout offer of $54.20 per share. The deal was finalized on October 27.
Following the acquisition, Twitter has faced challenges in maintaining its ad revenue, with concerns from some advertisers about potential associations with hate speech or inappropriate content due to looser content guidelines.
On May 12, Musk appointed Linda Yaccarino, a long-time executive in charge of NBCUniversal’s advertising division, as Twitter’s new CEO.
The case, Heresniak v. Musk et al., No. 22-03074, is being heard in the U.S. District Court, Northern District of California.