Montana...This was wonderfully written. You layered the content beautifully on how Chancellor McCormick led the defense attorneys further and further out on a limb of the notion that the shareholder proxy has divine authority before she chopped the limb off. This gal is formidable.
I would describe it as her pressing the clown bulb nose on the face of the attorney, but she's not apt to misled by a cloud of rhetoric.
She seems to be a very decent person as well as an outstanding judge, but occasionally, when the cloud of rhetoric threatens to fog up the courtroom, she will disperse it with the cold wind of legal reasoning. The wind chill must be unpleasant for those left standing in their legal skivvies.
She was tough but polite with Ross (for the individual Defendants) and Verrilli (for objector Amy Steffen), both of whom knew how to remain respectful.
She was not much interested in what Grady (for ARK and the other Florida objectors) had to say, which made sense as little he said was of interest.
With Koch (for Tesla), who decided to fence with her, accusing her of depriving the shareholders of a choice, she was lethal.
The most amusing was the pathetic Bayliss, trying to intervene on behalf of the "Special Committee." The fact that she had essentially brushed him aside says to me that she doesn't even need to consider the problems associated with Wilson-Thompson in order to make her ruling.
Agreed. There were a few astounding moments with Koch.
I don't think she does need to deal with Wilson-Thompson to rule under the current law, because the March decision reiterates the necessity of actual bargaining. There wasn't any. This was stated in the proxy.
Six years in, and there's never been any attempt to replicate arms-length bargaining to set a fair awards amount.
The essence of ratification in common law is that it either has the principal reaffirming the act of a proxy once the principal is in the position to do so (such as a minor at majority or a disabled person upon return to functionality) or the execution of missed requirements, thus the attempt by the Musk team to argue that somehow this vote was executed by shareholders now in a position of enhanced power.
The shareholders didn't gain any power here. Just the same choice, up or down. The shareholders don't get to negotiate. The board has to do it as their proxy. Given that the 2018 Exec. Award was never functionally negotiated, ratification is not in play. I predict she will quote from Match. She already did in the hearing.
The Chevalier de Panat, despairing about the spirit of French émigrés:
“You speak to me often of the madness of Verona,” he wrote in this January 1796 letter. “Alas, my good friend, this madness is general and incurable. How mistaken you are to believe there is any sense in the brother’s court! We see all of this up close and sigh: Nobody has been corrected; no one has forgotten anything, nor learned anything."
Yeah, shows how bad the SEC's response was to the "funding secured" debacle. Since then, Musk has steadily gained more control of the company. Do I believe that he can get that 5 billion funneled into X.ai? Yes. Do I believe that is in anyway sane? NO!
That's where the Tesla shareholders are. Not a place I would want to be.
Lawrence, another excellent analysis. We are very fortunate to have your involvement as a voice of reason in a sea of idiocy that surrounds Musk and his minions.
I think it's important to remember that she didn't force him to buy twitter. She ruled that the only way for him to avoid going to trial over it was to buy it.
I take your point, though had the case not settled, she might have resolved it with a summary judgment rather than a full-blown trial.
In my view, she essentially forced Musk to honor his contractual obligations by making abundantly clear that, as she viewed the case, (1) his arguments were unpersuasive, (2) he had waived due diligence, (3) the remedy was specific performance rather than liquidated damages, and (4) he was playing fast and loose with discovery. He decided to go forward with the purchase to avoid the even further potential damage of prejudgment interest and attorneys' fees.
Could you provide an article about the DOJ's security and wire fraud investigation into the exaggerated claims surrounding Tesla's vision-only system? I read an article stating that the DOJ is closing in on Tesla. Is it possible that the DOJ will have filed charges and completed grand jury discovery by the election? Or would it happen after a change in administration? I don't expect the grand jury to start deliberations before the election, as a pre-election indictment could appear politically motivated.
The supreme court refuse to include a decreasing fee structure, which means that McCorcormick should have enough material to rule on the fees. Given that the matter of the revote isn't seeing any discovery, she may have already decided on that matter with the law. Do you think that she could issue her ruling in the following weeks?
Obviously, I have no crystal ball. But I imagine the Delaware Supreme Court will be as conscientious as the Court of Chancery has been.
Two other things to consider: (1) by the time the Delaware Supreme Court gets the case, the world of Musk and Tesla may look a good deal different than it does today; and (2) even if the Del Sup Court reverses, I think the result would be a remand for further factual determinations by the Court of Chancery.
It's hard to imagine that they are going to overrule themselves in Match when they just decided it this year.
Despite all the HIGHLY paid rhetoric from the Musk team at this hearing, the bottom line is that if a vote can reinstate the award, then in essence Match is overruled. The requirement since MFW, reaffirmed somewhat strengthened and explicitly stated to pertain to all transactions involving non-ratable benefits to a conflicted controller requires a fully independent committee both empowered to replicate arms-length negotiations and demonstrably having done so. The ratification vote did not reach that piece of the process, notably missing from the 2018 extravaganza.
No nicely raised DE Chancellor overrules the DE SC!
I doubt the SC is going to throw flour in their collective faces, come staggering out with a plate of rice crispies and slap Musk on the back "Just kidding!"
When they issued the Match opinion they knew of the decision in Tornetta. These people are not dummies. There is a non-negligible chance that Tornetta influenced the Match ruling due to the egregious nature of the evidence and testimony at trial. When the head of the "independent committee" tells the independent members that there is no need for them to attend meetings, it is clear that this was a pro-forma exercise.
So Match required a committee of only independent directors. Such subtle details imply that the DE SC regards the negotiation of the deal as a critical step in an equitable process, and that the Tornetta case strengthened their prior assessment of the basic elements required to support deciding a case under the business judgment metric.
I'd be surprise if the DE SC even goes to oral argument in this case, there is seemingly nothing that is going to be contentious given that the Dell case as just been ruled upon.
It is not at all accurate to suggest that no one died as a result of the lies of Holmes. While it is difficult to tie any one individual death to her lies, unreliable blood labs absolutely kill people, and hers likely killed even more than Musk's have.
I've added a note to the piece to acknowledge your point.
If you know of even a single instance where someone has alleged death, or even harm, from a Theranos blood test, I would be appreciative if you would send me a link.
Unfortunately, though, there are few definitive cases because generally the only opportunity the victims had to find out the test result was wrong is if their doctor got suspicious of some part of the results and ordered a second test from another provider, and most of those cases the second test ended up preventing the harm to those particular patients.
Well, as you note, causation is difficult to show. My understanding is that many Theranos blood tests actually relied, at least in part, on third-party labs.
We can prove no deaths resulting from Holmes' fraud. There are scores resulting from Elon's fraud.
Montana...This was wonderfully written. You layered the content beautifully on how Chancellor McCormick led the defense attorneys further and further out on a limb of the notion that the shareholder proxy has divine authority before she chopped the limb off. This gal is formidable.
I would describe it as her pressing the clown bulb nose on the face of the attorney, but she's not apt to misled by a cloud of rhetoric.
She seems to be a very decent person as well as an outstanding judge, but occasionally, when the cloud of rhetoric threatens to fog up the courtroom, she will disperse it with the cold wind of legal reasoning. The wind chill must be unpleasant for those left standing in their legal skivvies.
She was tough but polite with Ross (for the individual Defendants) and Verrilli (for objector Amy Steffen), both of whom knew how to remain respectful.
She was not much interested in what Grady (for ARK and the other Florida objectors) had to say, which made sense as little he said was of interest.
With Koch (for Tesla), who decided to fence with her, accusing her of depriving the shareholders of a choice, she was lethal.
The most amusing was the pathetic Bayliss, trying to intervene on behalf of the "Special Committee." The fact that she had essentially brushed him aside says to me that she doesn't even need to consider the problems associated with Wilson-Thompson in order to make her ruling.
Agreed. There were a few astounding moments with Koch.
I don't think she does need to deal with Wilson-Thompson to rule under the current law, because the March decision reiterates the necessity of actual bargaining. There wasn't any. This was stated in the proxy.
Six years in, and there's never been any attempt to replicate arms-length bargaining to set a fair awards amount.
The essence of ratification in common law is that it either has the principal reaffirming the act of a proxy once the principal is in the position to do so (such as a minor at majority or a disabled person upon return to functionality) or the execution of missed requirements, thus the attempt by the Musk team to argue that somehow this vote was executed by shareholders now in a position of enhanced power.
The shareholders didn't gain any power here. Just the same choice, up or down. The shareholders don't get to negotiate. The board has to do it as their proxy. Given that the 2018 Exec. Award was never functionally negotiated, ratification is not in play. I predict she will quote from Match. She already did in the hearing.
The Chevalier de Panat, despairing about the spirit of French émigrés:
“You speak to me often of the madness of Verona,” he wrote in this January 1796 letter. “Alas, my good friend, this madness is general and incurable. How mistaken you are to believe there is any sense in the brother’s court! We see all of this up close and sigh: Nobody has been corrected; no one has forgotten anything, nor learned anything."
http://thesiecle.com/factcheck1/
Substitute "Tesla board" for "brother's court" and you have where we are.
Yeah, shows how bad the SEC's response was to the "funding secured" debacle. Since then, Musk has steadily gained more control of the company. Do I believe that he can get that 5 billion funneled into X.ai? Yes. Do I believe that is in anyway sane? NO!
That's where the Tesla shareholders are. Not a place I would want to be.
She is, indeed, a marvel.
and thank you for the kind words
Lawrence, another excellent analysis. We are very fortunate to have your involvement as a voice of reason in a sea of idiocy that surrounds Musk and his minions.
I think it's important to remember that she didn't force him to buy twitter. She ruled that the only way for him to avoid going to trial over it was to buy it.
I take your point, though had the case not settled, she might have resolved it with a summary judgment rather than a full-blown trial.
In my view, she essentially forced Musk to honor his contractual obligations by making abundantly clear that, as she viewed the case, (1) his arguments were unpersuasive, (2) he had waived due diligence, (3) the remedy was specific performance rather than liquidated damages, and (4) he was playing fast and loose with discovery. He decided to go forward with the purchase to avoid the even further potential damage of prejudgment interest and attorneys' fees.
Any updated sense of timeline for a ruling?
I'm thinking definitely in 2024, likely before December, probably before November, possibly before October.
Could you provide an article about the DOJ's security and wire fraud investigation into the exaggerated claims surrounding Tesla's vision-only system? I read an article stating that the DOJ is closing in on Tesla. Is it possible that the DOJ will have filed charges and completed grand jury discovery by the election? Or would it happen after a change in administration? I don't expect the grand jury to start deliberations before the election, as a pre-election indictment could appear politically motivated.
I could if I had any information about it. Alas, details of the investigation, if it is indeed ongoing, are unknown to me.
As for whether it matters who is President, I assume that, given how closely Musk has nuzzled up to one of the candidates, it might well matter.
https://www.msn.com/en-us/money/news/delaware-court-upholds-267m-fee-for-dell-shareholders-report/ar-AA1oR7AH?ocid=BingNewsSerp
The supreme court refuse to include a decreasing fee structure, which means that McCorcormick should have enough material to rule on the fees. Given that the matter of the revote isn't seeing any discovery, she may have already decided on that matter with the law. Do you think that she could issue her ruling in the following weeks?
Will the Delaware Supreme Court be cowed by Musk and his cult, or will they uphold Delaware law?
Obviously, I have no crystal ball. But I imagine the Delaware Supreme Court will be as conscientious as the Court of Chancery has been.
Two other things to consider: (1) by the time the Delaware Supreme Court gets the case, the world of Musk and Tesla may look a good deal different than it does today; and (2) even if the Del Sup Court reverses, I think the result would be a remand for further factual determinations by the Court of Chancery.
It's hard to imagine that they are going to overrule themselves in Match when they just decided it this year.
Despite all the HIGHLY paid rhetoric from the Musk team at this hearing, the bottom line is that if a vote can reinstate the award, then in essence Match is overruled. The requirement since MFW, reaffirmed somewhat strengthened and explicitly stated to pertain to all transactions involving non-ratable benefits to a conflicted controller requires a fully independent committee both empowered to replicate arms-length negotiations and demonstrably having done so. The ratification vote did not reach that piece of the process, notably missing from the 2018 extravaganza.
No nicely raised DE Chancellor overrules the DE SC!
I doubt the SC is going to throw flour in their collective faces, come staggering out with a plate of rice crispies and slap Musk on the back "Just kidding!"
When they issued the Match opinion they knew of the decision in Tornetta. These people are not dummies. There is a non-negligible chance that Tornetta influenced the Match ruling due to the egregious nature of the evidence and testimony at trial. When the head of the "independent committee" tells the independent members that there is no need for them to attend meetings, it is clear that this was a pro-forma exercise.
So Match required a committee of only independent directors. Such subtle details imply that the DE SC regards the negotiation of the deal as a critical step in an equitable process, and that the Tornetta case strengthened their prior assessment of the basic elements required to support deciding a case under the business judgment metric.
I'd be surprise if the DE SC even goes to oral argument in this case, there is seemingly nothing that is going to be contentious given that the Dell case as just been ruled upon.
For the biggest (dollar amount) case in Delaware history, the appellants will be afforded ample time for oral argument.
It is not at all accurate to suggest that no one died as a result of the lies of Holmes. While it is difficult to tie any one individual death to her lies, unreliable blood labs absolutely kill people, and hers likely killed even more than Musk's have.
I've added a note to the piece to acknowledge your point.
If you know of even a single instance where someone has alleged death, or even harm, from a Theranos blood test, I would be appreciative if you would send me a link.
https://www.cnbc.com/2021/09/21/theranos-test-gave-false-miscarriage-diagnosis-witness-testifies.html
Unfortunately, though, there are few definitive cases because generally the only opportunity the victims had to find out the test result was wrong is if their doctor got suspicious of some part of the results and ordered a second test from another provider, and most of those cases the second test ended up preventing the harm to those particular patients.
edit: Heres another one with even more significant harm alleged. https://arstechnica.com/science/2016/07/arizona-man-says-bum-theranos-blood-tests-led-to-heart-attack-files-lawsuit/
Well, as you note, causation is difficult to show. My understanding is that many Theranos blood tests actually relied, at least in part, on third-party labs.
We can prove no deaths resulting from Holmes' fraud. There are scores resulting from Elon's fraud.