A class-action lawsuit against Elon Musk, accusing him of wrongdoing in relation to the purchase of Twitter, has been dismissed by U.S. District Judge Charles Breyer in San Francisco. The lawsuit claimed that Musk cheated Twitter shareholders multiple times during the acquisition process, which amounted to $44 billion.
Judge Breyer ruled that the plaintiff, William Heresniak, lacked standing to sue as he challenged actions associated with Musk’s buyout rather than the fairness of the buyout itself. Heresniak failed to demonstrate any harm resulting from Musk’s delayed disclosure of a 9.2% Twitter stake, which allegedly allowed him to acquire additional shares at lower prices prior to the announcement of the buyout. The judge also found no evidence indicating that Musk assisted two friends who were serving on Twitter’s board, co-founder Jack Dorsey and Egon Durban of Silver Lake private equity firm, in breaching their fiduciary duties.
Breyer explained that Dorsey rolling over his approximately $1 billion worth of Twitter shares into an equity stake in the new company simply reduced Musk’s payment at closing and did not involve the improper diversion of money from other shareholders.
Lawyers representing Heresniak did not immediately respond to requests for comment.
Elon Musk, who is also the CEO of Tesla Inc. and the world’s second-richest person according to Forbes magazine, has yet to issue a statement regarding the dismissal. Similarly, attorneys for Musk, his holding companies, and Twitter have not provided any immediate comments.
In a court filing on March 3, Musk’s legal team dismissed Heresniak’s claims as a collection of disjointed and often irrelevant grievances against Elon Musk.
Heresniak filed the lawsuit on May 25, 2022, one month after Twitter accepted Musk’s buyout offer of $54.20 per share. The transaction was completed on October 27.
Following the acquisition, Twitter has faced challenges in maintaining ad revenue, with concerns raised by some advertisers about their ads being associated with hate speech or inappropriate content due to relaxed content rules.
On May 12, Musk appointed former NBCUniversal advertising chief Linda Yaccarino as Twitter’s new CEO.
The case, titled Heresniak v Musk et al, was filed in the U.S. District Court for the Northern District of California under case number 22-03074.