Twitter and Musk Press Court to Reject Coordinated Discovery Request in Cases Over Buyout

In response to a shareholder’s pre-dismissal request to coordinate and expedite discovery, defendants Twitter Inc. and its potential buyer Elon Musk have separately responded that the ask is inappropriate. Musk’s opposition says that aside from the merits of the case, “which are lacking,” the plaintiff’s proposed course of action will create “an unnecessary distraction and disruptive side show,” in the case between Musk and Twitter over whether the billionaire must purchase the social media platform in the proposed $44 billion deal.

The instant case was filed in May by a Twitter shareholder after Musk announced that the deal was temporarily on hold. The plaintiff filed an amended pleading on July 1, stating three claims for relief seeking essentially the same relief Twitter does: that Musk before forced to purchase the company as promised. The shareholder’s other claims seek to hold Musk accountable for misconduct related to the acquisition, including making negative and ostensibly false statements that drove its share price down by over 25%, or more than $8 billion in market capitalization.

In mid-August the plaintiff requested that the court coordinate discovery in the present action with that in the Delaware action, where it has already been expedited ahead of the parties’ October trial date.

Now, Twitter argues that the plaintiff lacks standing to bring the motion. Its opposition asserts that the shareholder is trying to enforce rights to a contract to which it is not a party: the Twitter-Musk deal. “In limited circumstances, a shareholder may enforce a right to payment due to them under a merger agreement, but a shareholder has no standing to enforce such a right until all conditions to closing are satisfied and their shares actually convert to a right to payment,” Twitter explains.

In addition, both parties contest the plaintiff’s “good cause,” with Musk citing “the absence of urgency, threat of irreparable harm, or even an explanation of what kind of injunctive relief he intends to seek.” Void of merit, Musk’s filing calls the motion “nothing more than a request to ride along on another case’s truncated schedule, unbounded by Rule 26’s relevance and proportionality requirements.”

The discovery dispute is before Magistrate Judge Sallie H. Kim.

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.