"Given the clear language in Article 3 of the U.S. Constitution about the Supreme Court’s subject matter jurisdiction, it would require an “analyst” of exceptional ignorance or cynicism to make such a claim. Who might the analyst behind the headline be? No surprise: Dan Ives of Wedbush Securities."
That one made me laugh loudest, and I had quite a few good chuckles reading this one, Lawrence.
This time around, Musk is bitching and complaining but he isn't threatening to quit Tesla.
That threat was never real, it was simply a ploy to influence the shareholder vote.
He has split off his AI company, but he knows that it cannot survive without Tesla. He will, as always, continue to treat the companies as if he owned 100% of both, and make no distinction between Tesla's money and his own when allocating costs and benefits.
The AI business will eventually fail, as will many others.
In a recent blog post, Ed Zitron rips into the AI business, using a reference to Beckett's play "Waiting for Godot", in which two tramps discuss meaningless drivel while waiting for someone who never arrives. Such is the current status of AI, massive capital expenditure, lots of promising talk, but the reward is always just around the next corner.
I don’t think money is his primary concern. If money was his objective, he would have joined his brother and his fellow directors in cashing out along the way, he must know the bubble has to burst at some time. He has previously, only cashed out to pay taxes on option exercise, and to buy Twitter.
He is more interested in power, and his 13% ownership leaves him vulnerable in the event, unlikely that it is, that the board grows a set of balls and finally decides to dump him.
Yeah, I don't see the DE SC assisting Tesla's wayward board with their problem.
I read a comment on SA asserting that Trump would force all government employees to drive Tesla cars. That's about where their heads are, but it is more probable than that the US Supreme Court would get involved!
Maybe they should pin their hopes on the Korean martial law including a mandate that only Tesla cars may be sold in Korea.
Stories like this always surprise me as one is slapped in the face with how little many US persons understand about the constitutional order.
Yes, this is an educational deficit which has real consequences. Although it does make for some hysterically funny moments, but then you think these people vote.
I've seen much of your work, and am deeply impressed. Thank you for all your insights. I have no idea how you do it, but like Mr Fossi, you are both sources of high fidelity information.
No you don't! You definitely don't! McCormick is kind of out there in a class of her own, so arguing about second and third place doesn't make sense. I just sit and gaze in awe.
She only swatted at this tangentially, but I personally was beyond wowed at the chutzpah of Musk's team arguing that since Musk was going to get the award anyway because he wanted it, there was no benefit to shareholders and therefore the plaintiff's team deserved only billing.
I've been periodically laughing about that ever since. That's right up there with "due diligence after signing the binding merger agreement".
I'm sure DE is glad to see him out the door. He just wastes their time and money.
Well, Mr Fossi, I found the 101 page letter today as well as a rather polite 4 page item by Chancellor of the Delaware Court of Chancery, Kathaleen St. Jude McCormick.
I have not read the main event, so am grateful you have done so and expertly analysed the results. Indeed Chancellor McKormick is an admirable person.
Even more to the point, Elon Musk is rewarded rather than getting nothing, so should close this matter. If he continues to fight, then his need of cash is possibly less serious than he pleaded.
I can understand he feels this is unjust, but after so many hours and thousands of documents - mainly from Tesla - this is the result. End of magnificent story.
Everyone gets some pain - 'the art of the deal'. Elon Musk is still spending cash freely, so it has come from somewhere, and so somehow, he's getting paid. Even if it's 'under the counter'.
Hey, Tesla just learned it can reverse a $2.3 billion comnpensation charge, and Tesla shareholders just learned that their percentage ownership in the company just increased by about 10%, so why wouldn’t the stock be up?
One further observation. Given DJ Trump and E Musk are both self-asserting individuals, but only one is the duly elected President, I suspect the 'dream team' will last a matter of months before creative differences cause tensions. I do not see this lasting 4 years.
Indeed, this was understatement. I agree, around February 2025 President Trump will have to assert his authority, which will make what's already obvious inescapable - there is only one duly elected President of the USA.
I feel sorry for Ramaswamy. He's going to do all the work, and Musk is going to get all the press time.
But I think that since nothing is really required of Musk, Musk will do whatever he can to stay in the limelight around Trump. He wants to be seen as powerful and influential. And Musk is lazy - this is the sweetest deal he's going to get.
I can see this too - thank you. However, Mr Musk wants to be the one to speak, the one to act. Standing to one side and smiling is not his thing. This will cause tensions, and I suspect it has already done so.
Interesting, you see brilliance, I see judicial activism. Behavior like this is precisely why Shakespeare wanted to kill all the lawyers first. In a free market capitalist country, shareholders of a company - not the State - should be the ones deciding what to pay the CEO. They spoke up not once, but twice. The fact that some judge can over rule the will of the owners of a company is a stark reminder just how far we have fallen as a country. It is the stuff of banana republics. While the totalitarian state has won today, this game is far from over. Make no mistake, Elon will get paid.
Of course the shareholders should decide. And, had Tesla afforded them the very sensible protections of MFW, they would have decided.
Did you read the opinion? Have you read the MFW or Match cases? I’m guessing not.
By the way, the “first thing we do, let’s kill all the lawyers” business from Shakespeare is an implicit reminder that the rule of law is what keeps us prosperous and free. Shakespeare is critical of the mentality that speaks that line. So maybe you should read Henry VI, Part 2 after you’ve read MFW and Match.
Oh, and how about reading all 101 pages of the latest opinion from the Chancellor. And then tell me exactly which ruling she made that you disagree with, and exactly why.
DE agrees with you that the shareholders should be the ones deciding what to pay the CEO, but DE is also cognizant that where there is a conflicted controller, a set of conditions exist that impose an inequity if the deal can simply be imposed by the controller, and the minority shareholders have only the choice to take it or leave it.
Thus, in its wisdom derived from several centuries of experience in dealing with some remarkably legally adept pocket-picking maneuvers, DE corporate law requires two things for a deal involving a non-ratable benefit to a conflicted controller:
1) Real negotiation to reach the benefit, and
2) The disinterested shareholders affirming the result.
It is possible that a real negotiation could have occurred and that Musk would have insisted on this deal. I believe we can agree that the shareholders would then have voted for it. In that case, we wouldn't ever have been in court.
You might want to think back to SolarCity. There the board first rejected the proposal, then there was some negotiation and outside experts. So DE decided that business judgment was the standard there, even though there was also clear self-dealing.
DE law is remarkably favorable to corporations and persons such as Musk, but there are limits, and here Musk and his board of human chiggers exceeded them all. Had they just followed the procedure, he'd have his options.
Whining about this rather minimal set of protections only makes sense if your portfolio is confined to Tesla stock. If you are invested in other large public corporations, these are protections that should be kept.
My interest in this is not to do Musk down, but to ensure that the companies in which I am invested aren't encouraged to merge and split with the result that the insiders get all the valuable assets and the small shareholders (me) wind up with a lovely portfolio of Confederate cash.
No, you wrote all this, but the commenter didn't read what you wrote, or perhaps wishes to convince others not to read it.
You have done a real public service in breaking this case down to the basics in your coverage here. DE law matters. It's important to the functioning of our system. It's important to investors in US securities.
I do apologize a bit for the churlish tone of that comment, because I'm lowering the tone, but it is more than a bit brazen to land here spouting Musk agitprop which is flatly contradicted by your coverage. I just want anyone who sees that comment to comprehend how ridiculous it is.
Sorry, didn’t mean to ping your cognitive dissonance. I didn’t realize this was an echo chamber only place to land.
Musk agitprop? I hate the f*cking guy. As despicable as he is, judicial activism is worse.
Thomas Sowell said the fact normal folk are terrified to walk into a courtroom while the true criminals swagger in and out, is proof of complete judicial corruption. I agree completely, because right & wrong carry no sway in that world. I don’t need a law degree to know right from wrong when I see it. Say what you want about this case, but it is wrong for some activist judge to over rule the will of shareholders, end of story.
I greatly admire the work of Thomas Sowell, by the way. One of the books that changed my thinking most was Knowledge and Decisions.
And, though I suppose I will grow weary of saying it before it ever sinks in with you, the set of rules carefully devised over a long period of time in Delaware, and revised from time to time based on experience, shows immense respect for the will of shareholders, provided the corporate fiduciaries, who have trust obligations, follow clearly outlined procedures to assure the process is fair.
You are accepting, without examining, the premise that a shareholder vote alone is sufficient to protect shareholder rights and shareholder value.
This, however, in the case of a conflicted controller, is actually the worst possible situation. That is because if a person or entity has control of the board, which Musk does, that entity can dictate the terms of what is presented to the shareholders for a vote. However this doesn't mean that the shareholders have a real choice, and indeed, the entire situation may be manipulated so that they don't, and that the dishonest insiders are protected against any legal action questioning their behavior.
The requirement for a negotiation process is therefore essential to ensure that the shareholders have some real choice. Due to the evolution of the corporate governance dysfunction at Tesla, it may be that the Tesla shareholders don't have any choices left. They are left with paper wealth which can only be sustained by Musk's manipulations.
But, in terms of DE law, which controls most of the top corporations and probably more than half of all public corporations in the US, what matters for the functioning of the overall system is that the protections in the law are retained. I exercise my choice not to invest with Musk, and I am quite adamant that my rights as a shareholder in over thirty corporations should not be derogated to make life a little better for either Musk or his investors. They have chosen. I should be able to chose to stay out of that swamp.
Law is a system of rules. Sustaining the system is essential. Musk is trying to get everyone fixated on the vote(s) because that is the best possible thing for him.
This is not Muskland, where critical thinking goes to die.
This is the Fossi forum. If you wish to debate the real issues, you are welcome, but the environment here cannot be friendly to glib and passionately determined ignorance.
They always become silent (or rant somewhere else) when the facts presented leave no more room for weaseling.
Me, I'm very happy to learn about subjects I have no stake in at all, being neither an American nor an investor in TSLA nor a lawyer.
OTOH, I spent my work life in proximity to the auto industry. And, as Tesla is an automobile company ( and neither a battery nor a software company), I'm interested in the subject.
It's not an echo chamber. It is a place in which the relative few who have an interest in these issues can read, learn and discuss.
I don't hate Musk, but I have an almost infinite disdain for his influence in several spheres, because he is adept at framing issues in a way which is deeply misleading but highly convincing to persons with only a superficial acquaintance with the underlying situation.
You ARE repeating his trope. You haven't read the coverage here, or you would know that.
I too admire Sowell, and his body of work. Sowell is always asking "What's really happening - how does this system really work?" If you take a Sowell-worthy look at this case and the framework of DE law in which it is embedded, you will discover that under DE law a judge cannot overrule the will of the shareholders, provided that the procedural protections to ensure that the shareholders are fully informed and that they are presented with reasonable choices have been observed, barring flagrant misdoing.
This case was legally decided on very clear evidence that those procedural protections weren't observed.
Once again, I urge you to read the opinion. It is, in its approach and its reliance on precedent, the very opposite of judicial activism. How one feels about Elon Musk is irrelevant to the analysis and the rulings.
I’ve no doubt the 101 pages of legal drivel is up to snuff as far as the letter of the law. It’s the right & wrong part i take issue with. As you say, there is no place for feelings about Elon with regards to this case, but recognize I am the one who has what it takes to set aside that hate and acknowledge he is getting jobbed.
Question: What happens now? If this case is destined for appeal to the Delaware Supreme Court, must Mr. Musk/Tesla post a $345 million dollar bond with the Chancery Court? What is the deadline for Mr. Musk/Tesla to appeal and/or pay opposing Counsel? I don't think we can expect alacrity from Mr. Musk/Tesla in seeking final settlement of this case.
Why do I get the feeling that Tornetta's lawyers will be back at the Chancery Court to compel payout before they see a copper from Mr. Musk/Tesla?
While far fetched, I wonder if Mr. Musk/Tesla can arrange a counter action from the new Texas Business Court if only to delay any payout. That 345 million payout should have been accompanied by usurious interest rates if payout is delayed.
Your prediction of additional chicanery ahead seems unusually insightful. Fortunately, we have you as a chronicler of the subterfuge ahead.
I am no expert in Delaware procedure, but I would guess the defendants will need to post a very large bond in order to prevent the plaintiff from “executing” on the judgment after whatever time period Delaware law stays execution (usually a matter of a few weeks). Failing such a bond, the defendants have to pay up before the appeal is decided. With such a bond, the plaintiff must wait to be paid, but there is statutory interest.
I should have mentioned in the article that the Chancellor gave the defendants the option of paying the judgment in either Tesla stock or cash.
As for Texas, MaxedOutMama has your answer. There’s nothing Texas can do to interfere with this case.
The last time I wrote about Delaware appellate procedure, Twitter and Musk were slugging it out in Chancery.
Appeal time: notice of appeal has to be filed within 30 days of the entry of the judgment upon the docket of the lower court. Del. Supr. Ct. Rule 6(a)(i).
Bond: If Musk wants to stay enforcement of the judgment while he appeals, he has to file a supersedeas bond (also called an "appeal bond" in other jurisdictions). The Delaware Constitution is pretty clear that simply appealing isn't enough to stay execution of the judgment; the party appealing has to post a supersedeas bond. The Chancellor has no room to waive that requirement even if Musk said "pretty please."
How much? The state constitution and Del. Supreme Court Rule 32(c) say "sufficient security." Once upon a time, that meant the entire amount of the judgment plus "just damages for delay and costs and interest on appeal." Rule 32(c) presumes that the security will be the amount of the judgment plus "all costs and damages, including damages for delay." Chancery can set the security at a lesser amount, but the party who is appealing (here, it's Musk) has "the burden to show that a lesser amount is sufficient in the circumstances." The Chancellor, being the trial judge in the case, has to approve the terms and amount of the supersedeas bond. If Musk doesn't like the bond as approved by the Chancellor, he can ask the state supreme court to modify the bond. The Supreme Court reviews the Chancellor's decision on an abuse of discretion standard. When I practiced, a motion to modify the bond was handled by a single Justice.
Post-judgment interest (since someone mentioned it): title 6, §2301 sets the rate at 5% over the Federal Reserve discount rate on the date of the judgment. For Chancery, the statutory rate is a guide, not an inflexible rule, an approach that stems from the nature of Chancery's equitable jurisdiction. The discount rate is 4.75%, making the statutory rate 9.75%.
With any amount of luck, I've managed to answer the questions folks had or may have. The primary references, if anyone wants to read up on the topic, are Article IV, §24 of the Delaware Constitution; Delaware Supreme Court Rule 32(a) and (c) [Rule 32(b) and (d) apply to criminal case]; Chancery Civil Rule 62(d) (which only refers the reader back to the Supreme Court rule).
Wow...now THAT is a reply. Wonderful information. 9.75% on a multi-million dollar judgement has a sweet ring to it. Hopefully, the Delaware Supreme Court is very busy and is backlogged leading to significant delay in reviewing cases.
To its great credit, the Delaware Supreme Court handles cases with expedition. They have it easier than the trial courts (including the Court of Chancery) because they don't have to engage in the messy and difficult business of fact-finding.
The TX courts can't overrule another court - estoppel does apply here. McCormick was quite careful to shut that door this summer. Any judgment in any other state is enforceable in Texas.
"Given the clear language in Article 3 of the U.S. Constitution about the Supreme Court’s subject matter jurisdiction, it would require an “analyst” of exceptional ignorance or cynicism to make such a claim. Who might the analyst behind the headline be? No surprise: Dan Ives of Wedbush Securities."
That one made me laugh loudest, and I had quite a few good chuckles reading this one, Lawrence.
Good work, Brother!
Yes, that guy statement was outrageous, he has 0 integrity and will always say whatever to pump TSLA
This time around, Musk is bitching and complaining but he isn't threatening to quit Tesla.
That threat was never real, it was simply a ploy to influence the shareholder vote.
He has split off his AI company, but he knows that it cannot survive without Tesla. He will, as always, continue to treat the companies as if he owned 100% of both, and make no distinction between Tesla's money and his own when allocating costs and benefits.
The AI business will eventually fail, as will many others.
In a recent blog post, Ed Zitron rips into the AI business, using a reference to Beckett's play "Waiting for Godot", in which two tramps discuss meaningless drivel while waiting for someone who never arrives. Such is the current status of AI, massive capital expenditure, lots of promising talk, but the reward is always just around the next corner.
https://www.wheresyoured.at/godot-isnt-making-it/
Beckett's play is a perfect analogy for the status of Musk's self driving car, it is always arriving "tomorrow".
It was indeed always a ploy.
But these days, do you ever wonder whether Musk is looking for a way to cash out of Tesla before its too late?
I don’t think money is his primary concern. If money was his objective, he would have joined his brother and his fellow directors in cashing out along the way, he must know the bubble has to burst at some time. He has previously, only cashed out to pay taxes on option exercise, and to buy Twitter.
He is more interested in power, and his 13% ownership leaves him vulnerable in the event, unlikely that it is, that the board grows a set of balls and finally decides to dump him.
I think he will go down with the ship.
Yeah, I don't see the DE SC assisting Tesla's wayward board with their problem.
I read a comment on SA asserting that Trump would force all government employees to drive Tesla cars. That's about where their heads are, but it is more probable than that the US Supreme Court would get involved!
Maybe they should pin their hopes on the Korean martial law including a mandate that only Tesla cars may be sold in Korea.
Stories like this always surprise me as one is slapped in the face with how little many US persons understand about the constitutional order.
Indeed. I saw another post at X, liked by many, proposing that Trump immediately appoint new judges to the Delaware Supreme Court.
The things kids don't learn in school any more...
Yes, this is an educational deficit which has real consequences. Although it does make for some hysterically funny moments, but then you think these people vote.
I've seen much of your work, and am deeply impressed. Thank you for all your insights. I have no idea how you do it, but like Mr Fossi, you are both sources of high fidelity information.
In these pages, I come in third behind MaxOutMama and Ranulf de Glanvill.
No you don't! You definitely don't! McCormick is kind of out there in a class of her own, so arguing about second and third place doesn't make sense. I just sit and gaze in awe.
She only swatted at this tangentially, but I personally was beyond wowed at the chutzpah of Musk's team arguing that since Musk was going to get the award anyway because he wanted it, there was no benefit to shareholders and therefore the plaintiff's team deserved only billing.
I've been periodically laughing about that ever since. That's right up there with "due diligence after signing the binding merger agreement".
I'm sure DE is glad to see him out the door. He just wastes their time and money.
I sense injustice.
actually, fourth. I forgot jaberwock.
Well, Mr Fossi, I found the 101 page letter today as well as a rather polite 4 page item by Chancellor of the Delaware Court of Chancery, Kathaleen St. Jude McCormick.
I have not read the main event, so am grateful you have done so and expertly analysed the results. Indeed Chancellor McKormick is an admirable person.
Even more to the point, Elon Musk is rewarded rather than getting nothing, so should close this matter. If he continues to fight, then his need of cash is possibly less serious than he pleaded.
I can understand he feels this is unjust, but after so many hours and thousands of documents - mainly from Tesla - this is the result. End of magnificent story.
How is Musk rewarded? He doesn't get anything out of this. The lawyers do, the other shareholders do. Not that they are happy.
Everyone gets some pain - 'the art of the deal'. Elon Musk is still spending cash freely, so it has come from somewhere, and so somehow, he's getting paid. Even if it's 'under the counter'.
Superb. You nailed it. Yet TSLA up this morning.
Hey, Tesla just learned it can reverse a $2.3 billion comnpensation charge, and Tesla shareholders just learned that their percentage ownership in the company just increased by about 10%, so why wouldn’t the stock be up?
One further observation. Given DJ Trump and E Musk are both self-asserting individuals, but only one is the duly elected President, I suspect the 'dream team' will last a matter of months before creative differences cause tensions. I do not see this lasting 4 years.
"self-asserting"?
I think "raging egomaniacal narcissists" might be more accurate.
Yeah, four years won't happen, and it may not even last four months.
Indeed, this was understatement. I agree, around February 2025 President Trump will have to assert his authority, which will make what's already obvious inescapable - there is only one duly elected President of the USA.
I feel sorry for Ramaswamy. He's going to do all the work, and Musk is going to get all the press time.
But I think that since nothing is really required of Musk, Musk will do whatever he can to stay in the limelight around Trump. He wants to be seen as powerful and influential. And Musk is lazy - this is the sweetest deal he's going to get.
I can see this too - thank you. However, Mr Musk wants to be the one to speak, the one to act. Standing to one side and smiling is not his thing. This will cause tensions, and I suspect it has already done so.
Well, he's got his 44 billion dollar platform. He'll have to be content with that.
Gosh. How will he manage his costs? So little cash. Not.
Interesting, you see brilliance, I see judicial activism. Behavior like this is precisely why Shakespeare wanted to kill all the lawyers first. In a free market capitalist country, shareholders of a company - not the State - should be the ones deciding what to pay the CEO. They spoke up not once, but twice. The fact that some judge can over rule the will of the owners of a company is a stark reminder just how far we have fallen as a country. It is the stuff of banana republics. While the totalitarian state has won today, this game is far from over. Make no mistake, Elon will get paid.
Of course the shareholders should decide. And, had Tesla afforded them the very sensible protections of MFW, they would have decided.
Did you read the opinion? Have you read the MFW or Match cases? I’m guessing not.
By the way, the “first thing we do, let’s kill all the lawyers” business from Shakespeare is an implicit reminder that the rule of law is what keeps us prosperous and free. Shakespeare is critical of the mentality that speaks that line. So maybe you should read Henry VI, Part 2 after you’ve read MFW and Match.
Oh, and how about reading all 101 pages of the latest opinion from the Chancellor. And then tell me exactly which ruling she made that you disagree with, and exactly why.
DE agrees with you that the shareholders should be the ones deciding what to pay the CEO, but DE is also cognizant that where there is a conflicted controller, a set of conditions exist that impose an inequity if the deal can simply be imposed by the controller, and the minority shareholders have only the choice to take it or leave it.
Thus, in its wisdom derived from several centuries of experience in dealing with some remarkably legally adept pocket-picking maneuvers, DE corporate law requires two things for a deal involving a non-ratable benefit to a conflicted controller:
1) Real negotiation to reach the benefit, and
2) The disinterested shareholders affirming the result.
It is possible that a real negotiation could have occurred and that Musk would have insisted on this deal. I believe we can agree that the shareholders would then have voted for it. In that case, we wouldn't ever have been in court.
You might want to think back to SolarCity. There the board first rejected the proposal, then there was some negotiation and outside experts. So DE decided that business judgment was the standard there, even though there was also clear self-dealing.
DE law is remarkably favorable to corporations and persons such as Musk, but there are limits, and here Musk and his board of human chiggers exceeded them all. Had they just followed the procedure, he'd have his options.
Whining about this rather minimal set of protections only makes sense if your portfolio is confined to Tesla stock. If you are invested in other large public corporations, these are protections that should be kept.
My interest in this is not to do Musk down, but to ensure that the companies in which I am invested aren't encouraged to merge and split with the result that the insiders get all the valuable assets and the small shareholders (me) wind up with a lovely portfolio of Confederate cash.
This says it so much better than I did. Thank you.
No, you wrote all this, but the commenter didn't read what you wrote, or perhaps wishes to convince others not to read it.
You have done a real public service in breaking this case down to the basics in your coverage here. DE law matters. It's important to the functioning of our system. It's important to investors in US securities.
I do apologize a bit for the churlish tone of that comment, because I'm lowering the tone, but it is more than a bit brazen to land here spouting Musk agitprop which is flatly contradicted by your coverage. I just want anyone who sees that comment to comprehend how ridiculous it is.
Sorry, didn’t mean to ping your cognitive dissonance. I didn’t realize this was an echo chamber only place to land.
Musk agitprop? I hate the f*cking guy. As despicable as he is, judicial activism is worse.
Thomas Sowell said the fact normal folk are terrified to walk into a courtroom while the true criminals swagger in and out, is proof of complete judicial corruption. I agree completely, because right & wrong carry no sway in that world. I don’t need a law degree to know right from wrong when I see it. Say what you want about this case, but it is wrong for some activist judge to over rule the will of shareholders, end of story.
I greatly admire the work of Thomas Sowell, by the way. One of the books that changed my thinking most was Knowledge and Decisions.
And, though I suppose I will grow weary of saying it before it ever sinks in with you, the set of rules carefully devised over a long period of time in Delaware, and revised from time to time based on experience, shows immense respect for the will of shareholders, provided the corporate fiduciaries, who have trust obligations, follow clearly outlined procedures to assure the process is fair.
Yes, excellent read. Sowell is an absolute genius.
You are accepting, without examining, the premise that a shareholder vote alone is sufficient to protect shareholder rights and shareholder value.
This, however, in the case of a conflicted controller, is actually the worst possible situation. That is because if a person or entity has control of the board, which Musk does, that entity can dictate the terms of what is presented to the shareholders for a vote. However this doesn't mean that the shareholders have a real choice, and indeed, the entire situation may be manipulated so that they don't, and that the dishonest insiders are protected against any legal action questioning their behavior.
The requirement for a negotiation process is therefore essential to ensure that the shareholders have some real choice. Due to the evolution of the corporate governance dysfunction at Tesla, it may be that the Tesla shareholders don't have any choices left. They are left with paper wealth which can only be sustained by Musk's manipulations.
But, in terms of DE law, which controls most of the top corporations and probably more than half of all public corporations in the US, what matters for the functioning of the overall system is that the protections in the law are retained. I exercise my choice not to invest with Musk, and I am quite adamant that my rights as a shareholder in over thirty corporations should not be derogated to make life a little better for either Musk or his investors. They have chosen. I should be able to chose to stay out of that swamp.
Law is a system of rules. Sustaining the system is essential. Musk is trying to get everyone fixated on the vote(s) because that is the best possible thing for him.
This is not Muskland, where critical thinking goes to die.
This is the Fossi forum. If you wish to debate the real issues, you are welcome, but the environment here cannot be friendly to glib and passionately determined ignorance.
They always become silent (or rant somewhere else) when the facts presented leave no more room for weaseling.
Me, I'm very happy to learn about subjects I have no stake in at all, being neither an American nor an investor in TSLA nor a lawyer.
OTOH, I spent my work life in proximity to the auto industry. And, as Tesla is an automobile company ( and neither a battery nor a software company), I'm interested in the subject.
Thank you all for educating people like me.
It's not an echo chamber. It is a place in which the relative few who have an interest in these issues can read, learn and discuss.
I don't hate Musk, but I have an almost infinite disdain for his influence in several spheres, because he is adept at framing issues in a way which is deeply misleading but highly convincing to persons with only a superficial acquaintance with the underlying situation.
You ARE repeating his trope. You haven't read the coverage here, or you would know that.
I too admire Sowell, and his body of work. Sowell is always asking "What's really happening - how does this system really work?" If you take a Sowell-worthy look at this case and the framework of DE law in which it is embedded, you will discover that under DE law a judge cannot overrule the will of the shareholders, provided that the procedural protections to ensure that the shareholders are fully informed and that they are presented with reasonable choices have been observed, barring flagrant misdoing.
This case was legally decided on very clear evidence that those procedural protections weren't observed.
Once again, I urge you to read the opinion. It is, in its approach and its reliance on precedent, the very opposite of judicial activism. How one feels about Elon Musk is irrelevant to the analysis and the rulings.
I’ve no doubt the 101 pages of legal drivel is up to snuff as far as the letter of the law. It’s the right & wrong part i take issue with. As you say, there is no place for feelings about Elon with regards to this case, but recognize I am the one who has what it takes to set aside that hate and acknowledge he is getting jobbed.
Question: What happens now? If this case is destined for appeal to the Delaware Supreme Court, must Mr. Musk/Tesla post a $345 million dollar bond with the Chancery Court? What is the deadline for Mr. Musk/Tesla to appeal and/or pay opposing Counsel? I don't think we can expect alacrity from Mr. Musk/Tesla in seeking final settlement of this case.
Why do I get the feeling that Tornetta's lawyers will be back at the Chancery Court to compel payout before they see a copper from Mr. Musk/Tesla?
While far fetched, I wonder if Mr. Musk/Tesla can arrange a counter action from the new Texas Business Court if only to delay any payout. That 345 million payout should have been accompanied by usurious interest rates if payout is delayed.
Your prediction of additional chicanery ahead seems unusually insightful. Fortunately, we have you as a chronicler of the subterfuge ahead.
I am no expert in Delaware procedure, but I would guess the defendants will need to post a very large bond in order to prevent the plaintiff from “executing” on the judgment after whatever time period Delaware law stays execution (usually a matter of a few weeks). Failing such a bond, the defendants have to pay up before the appeal is decided. With such a bond, the plaintiff must wait to be paid, but there is statutory interest.
I should have mentioned in the article that the Chancellor gave the defendants the option of paying the judgment in either Tesla stock or cash.
As for Texas, MaxedOutMama has your answer. There’s nothing Texas can do to interfere with this case.
The last time I wrote about Delaware appellate procedure, Twitter and Musk were slugging it out in Chancery.
Appeal time: notice of appeal has to be filed within 30 days of the entry of the judgment upon the docket of the lower court. Del. Supr. Ct. Rule 6(a)(i).
Bond: If Musk wants to stay enforcement of the judgment while he appeals, he has to file a supersedeas bond (also called an "appeal bond" in other jurisdictions). The Delaware Constitution is pretty clear that simply appealing isn't enough to stay execution of the judgment; the party appealing has to post a supersedeas bond. The Chancellor has no room to waive that requirement even if Musk said "pretty please."
How much? The state constitution and Del. Supreme Court Rule 32(c) say "sufficient security." Once upon a time, that meant the entire amount of the judgment plus "just damages for delay and costs and interest on appeal." Rule 32(c) presumes that the security will be the amount of the judgment plus "all costs and damages, including damages for delay." Chancery can set the security at a lesser amount, but the party who is appealing (here, it's Musk) has "the burden to show that a lesser amount is sufficient in the circumstances." The Chancellor, being the trial judge in the case, has to approve the terms and amount of the supersedeas bond. If Musk doesn't like the bond as approved by the Chancellor, he can ask the state supreme court to modify the bond. The Supreme Court reviews the Chancellor's decision on an abuse of discretion standard. When I practiced, a motion to modify the bond was handled by a single Justice.
Post-judgment interest (since someone mentioned it): title 6, §2301 sets the rate at 5% over the Federal Reserve discount rate on the date of the judgment. For Chancery, the statutory rate is a guide, not an inflexible rule, an approach that stems from the nature of Chancery's equitable jurisdiction. The discount rate is 4.75%, making the statutory rate 9.75%.
With any amount of luck, I've managed to answer the questions folks had or may have. The primary references, if anyone wants to read up on the topic, are Article IV, §24 of the Delaware Constitution; Delaware Supreme Court Rule 32(a) and (c) [Rule 32(b) and (d) apply to criminal case]; Chancery Civil Rule 62(d) (which only refers the reader back to the Supreme Court rule).
Woah! This is exactly the information we were seeking. It is so valuable to have such knowledgeable people reading and commenting here. Thank you!
Your comment caused me to do just a bit of research on you. It appears you had a highly distinguished legal career.
https://en.wikipedia.org/wiki/Ranulf_de_Glanvill
And nothing is more appealing than a dog ready to play. I have two of them.
But, again, seriously, thank you for this detailed and useful information.
Wow...now THAT is a reply. Wonderful information. 9.75% on a multi-million dollar judgement has a sweet ring to it. Hopefully, the Delaware Supreme Court is very busy and is backlogged leading to significant delay in reviewing cases.
To its great credit, the Delaware Supreme Court handles cases with expedition. They have it easier than the trial courts (including the Court of Chancery) because they don't have to engage in the messy and difficult business of fact-finding.
Shame that.
Thank you so much for this detailed information!
The TX courts can't overrule another court - estoppel does apply here. McCormick was quite careful to shut that door this summer. Any judgment in any other state is enforceable in Texas.