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In a decision on Monday, U.S. District Judge Charles Breyer in
San Francisco said plaintiff William Heresniak lacked standing
to sue because he challenged "wrongs associated with" Musk's
buyout, not the fairness of the buyout itself.
Breyer said Heresniak did not show harm from Musk's belated
disclosure of a 9.2% Twitter stake, which the suit said let him
buy more shares at lower prices before the buyout was announced,
or from the closing's taking place 1 1/2 months later than
planned.
The judge also found no proof that Musk helped two friends then
on Twitter's board, co-founder Jack Dorsey and Silver Lake
private equity firm managing partner Egon Durban, breach their
fiduciary duties by favoring their own and Musk's interests.
Breyer said letting Dorsey roll over his approximately $1
billion of Twitter shares into an equity stake in the new
company merely reduced how much Musk had to pay at closing, and
did not "improperly divert" money from other shareholders.
Heresniak's lawyers did not immediately respond to requests for
comment outside business hours.
Musk also runs electric car company Tesla Inc and is the world's
second-richest person, according to Forbes magazine.
Lawyers for Musk, two of his holding companies and Twitter 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
Oct. 27.
Twitter has since struggled to maintain ad revenue, with some
advertisers expressing concern that loosened content rules could
leave their ads associated with hate speech or other "wrong
messages."
On May 12, Musk named former NBCUniversal advertising chief
Linda Yaccarino as Twitter's new chief executive.
The case is Heresniak v Musk et al, U.S. District Court,
Northern District of California, No. 22-03074.
(Reporting by Jonathan Stempel in New York. Editing by Gerry
Doyle)
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