Twitter Moves to Dismiss Class Action Seeking to Compel Elon Musk Buyout

Twitter has asked the court overseeing the declaratory relief suit against it and Elon Musk to toss the case in part because it is duplicative of relief Twitter itself seeks: forcing Musk to purchase the company for $44 billion under the agreed-to terms.

The company’s motion to dismiss says the shareholder cannot enforce rights to a contract they are not a party to, and secondarily, that the suit belongs, if anywhere, in Delaware Chancery Court where the main battle between Musk and Twitter is playing out as is another nearly identical shareholder suit.

The motion to dismiss comes after Magistrate Judge Sallie H. Kim denied the plaintiff’s bid to coordinate discovery with the Chancery case between Musk and Twitter. The opinion said that the request was unsubstantiated and too burdensome in view of the gravity and complexity of the case and its expedited trial schedule.

Now, Twitter has asked the court to reject the case, first stating that “[u]nwilling to stand back – even briefly – while Twitter pursues enforcement of the Merger Agreement against the Musk Defendants, Plaintiff … insists on pursuing a wholly unnecessary claim in this Court demanding substantially the same relief that both Twitter and another Twitter stockholder are pursuing on an expedited schedule in Delaware.” 

Citing a purported lack of subject matter jurisdiction, Twitter points to the fact that the shareholder plaintiff is not a party to the buyout deal. “A party’s inability to enforce the terms of a contract as a non-party raises a standing issue that defeats jurisdiction,” the motion explains.

Furthermore, the company says the court has discretion to exercise jurisdiction over the case pursuant to an doctrine that permits courts to abstain from deciding cases whether the relief sought is declaratory in nature, as here, where the shareholder seeks a declaration that Musk is in breach of the buyout agreement and ordering him to consummate the purchase.

Lastly, Twitter adds that the case is in the wrong forum and cannot be transferred to another federal court because of the transacting parties’ agreed-to Delaware Chancery forum. At the very least, Twitter says the case should be transferred to the District of Delaware.

For their part, Musk’s holding company defendants made similar arguments in a separate filing seeking dismissal of the case.

The plaintiff is represented by Cotchett, Pitre & McCarthy, LLP and Bottini & Bottini Inc. and Musk by Quinn Emanuel Urquhart & Sullivan LLP and Twitter by Shearman & Sterling LLP.