Judge rules for Elon Musk in $13 billion lawsuit over Tesla-SolarCity deal
By Tom Hals
(Reuters) -Tesla Inc Chief Government Officer Elon Musk didn’t unjustly enrich himself when he guided the electrical car maker in 2016 to amass SolarCity Corp, the place Musk was chairman and the biggest shareholder, a Delaware decide dominated on Wednesday.
Tesla shareholders had accused Musk of coercing Tesla’s board into shopping for SolarCity, a struggling rooftop photo voltaic panel maker, to rescue his funding, and had sought as much as $13 billion in damages.
The ruling comes as Musk is tapping his huge fortune to amass Twitter Inc, which accepted his $44 billion supply on Monday. It additionally adopted a ruling from a separate courtroom earlier within the day that denied a Musk bid to finish oversight of his Tesla tweets.
“The preponderance of the proof reveals that Tesla paid a good worth — SolarCity was, at a minimal, price what Tesla paid for it, and the acquisition in any other case was extremely helpful to Tesla,” mentioned the opinion by Vice Chancellor Joseph Slights of Delaware’s Court docket of Chancery.
The ruling will be appealed and a lawyer for the shareholders mentioned he was evaluating potential subsequent steps.
“The case is about loyalty. The courtroom’s choice acknowledges that Elon Musk was conflicted and there have been flaws within the course of,” mentioned Randall Baron, the lawyer for the plaintiffs.
There was no instant response from Tesla or Musk.
Slights mentioned Musk was extra concerned than he ought to have been, however a good worth for SolarCity outweighed claims the deal unjustly enriched Musk.
The ruling follows a 10-day trial in July which included practically two full days of testimony from Musk.
Union pension funds and asset managers alleged that Musk commandeered Tesla’s negotiations for SolarCity whereas publicly claiming to be “absolutely recused.”
Slights mentioned Musk on a number of events was concerned in board discussions of the deal, however he additionally famous a number of situations when the board stood as much as Musk and declined to observe his needs, such because the timing of the deal.
The all-stock deal was valued at $2.6 billion in 2016.
Tesla’s inventory worth has since soared, inflating the worth of what Musk obtained from the SolarCity buy and in flip the damages sought by the plaintiffs.
Musk, the world’s richest individual with a fortune of round $265.6 billion in keeping with Forbes, had owned about 22% of each corporations on the time.
(Reporting by Tom Hals in Wilmington, Delaware; Enhancing by Howard Goller)
