Twitter is suing Elon Musk to force him to follow through on his deal to buy the social media company. The Tesla CEO officially backed out of his $44 billion offer last week, claiming that Twitter hadn't provided enough information on spam accounts. Brian Quinn, a professor at Boston College Law School, joined Cheddar News to break down what the lawsuit alleges, what a court in Delaware has to do with it, and if Elon Musk has anything to worry about from Twitter's legal action. "They're looking for specific performance, which would be an order from the court to get him to complete the transaction, which courts in Delaware haven't have granted in the past — in the last couple of years," he said. "Even so, it’'s not outside the realm of the possible that if they win that the court would order Musk to complete the transaction."

Opening Bell

'Not Outside the Realm of the Possible' Twitter Wins Lawsuit Against Musk

here with more insight on this is brian Quinn professor at boston College law school brian, can you just break down this lawsuit and exactly what twitter is accusing Elon musk. Sure. So twitter filed this lawsuit just a couple of days ago and in the lawsuit they alleged that must really had some buyer's remorse following purchase of the twitter of twitter when they signed the contract. So their argument is basically that when the stock when when the stock market and Tesla stock price declined that made that made twitter much more expensive for musk and he decided to look for a pretext to walk away from the deal and they point to his information demands with respect to bots as merely just a pretext to just walk and not do the deal. So they're suing in Delaware and they're asking for what's called specific performance in order from the court to force must to complete the transaction. Alright, this is clearly the very beginning of what could be a long lengthy legal battle. So so breakdown where we go from here now that there's a suit is official. Can twitter really force must to hold up his end of this deal I guess to your point there, you know under that that that clause in the law. Yeah, so uh twitter has already filed what's called a motion to expedite that's going to put this litigation on a fast track in Delaware, that means that this litigation can take about a year which in the world of business litigation is really fast. Um so from start to finish if they litigate this to the end, it's about a year. Uh, and they're looking for specific performance, which would be an order from the court to get him to complete the transaction, which courts in Delaware haven't have granted in the past in the, in the last couple of years even so, it's not outside the realm of the possible that if they win that the court would order must to complete the transaction. A bit of an interesting detail in this case. I think for the average person, is that the, this is filed in a Delaware Court of Chancery, a century old court in Delaware. Can you break down a little bit why the lawsuit was filed here? What the significance, um, you know that this court has, I think if you're not a business person that you don't fully understand that, like most companies are incorporated, Delaware, this seems interesting in the small state of Delaware having all this exposure in this moment right now to this case, right. It's cases like this that give Delaware it's time in the sun. Uh, so the Court of Chancery in Delaware is a court that hears mostly complex business transaction cases. Uh, why? Well, 60% or more of publicly traded corporations are incorporated in the state of Delaware? And when a, when a company incorporates in the state, they elect to use that state's corporate law to govern their internal governance and issues with respect to merger are certainly uh, an issue of internal governance with the corporation. So they're subject to Delaware law and the proper venue for litigating or resolving these disputes are in the courts in Delaware. So, Delaware, here's lots of cases like this involving corporations incorporated in the state and parties doing transactions involving the corporate law of Delaware. Yeah, I think it's just fascinating people get to learn a little bit about that. And the reality of Delaware, playing such a big role in a lot of publicly traded companies because of the way that it favors kind of those inc status is moving beyond that though. What I find is another interesting detail that a lot of people have been talking about on the last day or two, is that even if the courts, you know, force him, so to speak or order that he buys the company, What happens if Elon musk refuses to comply with the court's order? Right, So that's an interesting question. So, typically, uh, parties comply with the, with the orders of the court. So it's not the kind of thing that happens a lot, but it does happen that parties don't comply. We've seen that recently with chinese corporations incorporated in Delaware and, and litigation related to chinese corporations. At which point the Delaware courts have, you know, a host of powers, uh, equal powers that they can, they can rely on. So, for example, uh, they can seize assets of any of any person who's sub to their jurisdiction, if those assets are in Delaware. So, for example, they can seize the assets of, uh, of perhaps Tesla, I'm sorry, the, the Tesla stock that, that musk has in order to compel him to appear in front of the court so he can't simply thumb his nose and walk away and pretend like Delaware doesn't exist because his other corporations that he, that he's involved with our Delaware corporations and the court can order the directors of those corporations to seize, seize the stock and turn it over to the Delaware courts until he appears. So they have considerable, uh, power to compel him to comply. Uh, and even beyond that, they can, uh, the court can order a Receivership, they can take over a company, a Delaware company. And it could also use tools of civil contempt from what you see here. Cause I think, to be fair, I think I'm focusing a little bit more on the twitter side of things, but I want to pivot just really quickly to the Elon musk side of things. What, how strong is his argument? Do you think there is some valid legal ground for him to say no, I, I can back out of this deal. It wasn't what I thought. Yeah. So it's gonna be hard. Um, when he did this deal, I mean, obviously, he's gonna have his opportunity, the fact that we've seen alleged in the complaint are the facts as alleged by the plaintiff by twitter. He and his lawyers are gonna have their opportunity to present their facts that they think are important. So when we look at this case right now we want to just take that into consideration. But as the facts are alleged right now, uh, you know, all the facts seem to line up against him with respect to the claims that he's making. Uh, he did this deal waving due diligence, he did this deal understanding that bots were a problem. Indeed bots were one of the primary motivations to do the transaction. I mean he thought he thought at least he told people that he would be able to take care of the box. So now coming in after he signed and pointing to the box is a problem and a reason not to do the deal seems a little bit disingenuous and hard to swallow Brian. I am actually over time but really quickly like 15 seconds here. Have you ever seen anything like this where court potentially will force one company or one owner of one company to buy another. Yes, we've seen it in the, in the recent past. KK are forced to purchase deco pack just last year, awesome brian. Such great insight, really appreciate it. We got to have you back as this case just continues to develop brian Quinn professor at boston College law school. Thank you so much