The Delaware state court judge overseeing the litigation between Twitter and Elon Musk dealing with Musk’s attempt to cancel the contract for the purchase of all shares of Twitter issued a series of orders on Wednesday denying Musk’s request to delay the trial in the case set to begin next month.
— FOX Business (@FoxBusiness) September 7, 2022
Delaware Court of Chancery Chancellor Kathaleen St. Judge McCormick also issued rulings on a number of pre-trial discovery issues the parties had raised.
Musk recently asked the court to allow him to take further discovery and to extend the trial date because of a previously unknown corporate whistleblower’s report first revealed when it was published by the Washington Post on August 23, less than two months before the first day of trial.
The reporting indicated that former head of security for Twitter Peiter “Mudge” Zatko claims that the social media giant is unable to protect its more than 238 million users from hacking threats. Zatko’s report was filed in July with the U.S. Securities and Exchange Commission and the Department of Justice.
The whistleblower alleged that Twitter knowingly violated the terms of an agreement reached with the Federal Trade Commission more than a decade ago. In that agreement, Twitter represented to the FTC that it had a “solid security plan,” even though the platform had significant vulnerabilities to hacking attacks.
Twitter CEO Parag Agrawal issued an internal corporate memo telling employees that Zatko’s allegations are a “fake narrative.”
Chancellor McCormick ruled on Wednesday that Musk will be allowed to amend his counterclaim at trial against Twitter to include the allegations raised by the newly revealed whistleblower report. She also set out a procedure for additional expedited discovery of relevant evidence bearing on the new defenses Musk said he wanted to raise against the contract.
However, the court denied Musk’s request to delay that trial because of the new allegations. She said that any delay in the trial creates a “greater risk of irreparable harm to Twitter.” She said that she is “convinced that even four weeks delay would risk further harm to Twitter too great to justify.”
Twitter sued Musk in July seeking an order compelling him to complete the purchase of Twitter’s stock at the agreed-on price of $44 billion contained in their contract. Musk had announced his intention to cancel the deal when he said he believed the company lied to him about the number of “spam” and “bot” accounts on the platform in order to fraudulently inflate the number of actual human users.
The trial is set to begin in Wilmington, Delaware, on October 17 and is expected to last through mid-November.