SAN FRANCISCO: A judge dismissed a proposed class-action lawsuit against Elon Musk that claimed he cheated Twitter shareholders several times last year while buying the social media company for $44 billion.
In a decision on Monday in San Francisco, US District Judge Charles Breyer said plaintiff William Heresniak lacked standing to file a legal lawsuit because he challenged “wrongs associated with” Musk’s buyout rather than the fairness of the buyout itself.
Breyer ruled that Heresniak had not demonstrated harm from Musk’s delayed disclosure of his 9.2% Twitter stake, which allowed him to purchase additional shares at lower prices before the buyout announcement of the buyout or from the closing’s 11/2-month delay.
The judge also found no evidence that Musk assisted two friends who were board members of Twitter at the time, co-founder Jack Dorsey and managing partner of the Silver Lake private equity company Egon Durban, in violating their fiduciary obligations by prioritizing Musk’s and their interests.
Breyer argued that allowing Dorsey to convert his roughly $1 billion in Twitter shares into a stake in the new business only decreased the amount Musk had to pay at closure and did not “improperly divert” funds away from other shareholders.
Heresniak’s lawyers only responded to requests for comment during business hours.
According to Forbes magazine, Musk also runs the electric car company Tesla Inc (TSLA.O) and is the world’s second-richest person.
Lawyers for Musk, Twitter, and two of his holding companies did not immediately respond to requests for comment.
In a March 3 court filing, they called Heresniak’s claims “a disjointed laundry list of – often irrelevant – grievances against Elon Musk.”
Heresniak sued on May 25, 2022, one month after Twitter accepted Musk’s $54.20 per share buyout offer. The transaction closed on October 27.
Twitter has since tried to maintain revenue generated from ads, with some advertisers showing concern that relaxed content rules could leave their ads associated with other “wrong messages or hate speech.”
Musk named former NBCUniversal advertising chief Linda Yaccarino Twitter’s new chief executive on May 12.
