Delaware judge dismisses straight cases versus Elon Musk in SolarCity lawsuit

Oct 27, 2021 03:11 PM ET
  • A Delaware judge has actually disregarded straight insurance claims against Tesla CEO Elon Musk over his part in the US$ 2.6 billion purchase of property solar installer SolarCity.
Delaware judge dismisses straight cases versus Elon Musk in SolarCity lawsuit
Image: Heisenberg Media via Flickr

On Friday (22 October), Judge Joseph Slights III decertified the class action legal action and also limited the shareholder action versus Musk, although he still enabled them to file a claim against the chief executive officer in his function of Tesla supervisor.

Tesla investors are looking for to come back the US$ 2.6 billion the business spent for the battling module manufacturer back in 2016, saying that Musk pushed the Tesla board to purchase SolarCity that was founded by Musk's cousins as well as in which he had a 22% stake.

The bargain, first announced in June of that year, was subject to months of scrutiny and investigations yet at some point won shareholder authorization in November 2016. Musk's relative, Lyndon Rive, left Tesla less than a year later.

At the time, Musk also owned a 22% risk in Tesla and said: "Considering that it was a stock-for-stock deal and I had almost specifically the exact same percent of both [companies] there was no monetary gain."

Slights pointed out the Delaware Supreme Court's September decision relating to an unassociated case that found claims of overspend or the inappropriate dilution of existing shareholders can only be brought derivatively, suggesting Musk is not directly liable.

"This Action is no longer certified as a class 3 action pursuant to Court of Chancery Rule 23 as well as will proceed exclusively as a derivative activity under Court of Chancery Rule 23.1," read the order.

In judgment so, Slights has narrowed the range to lawsuit in the case and has maintained various other Tesla directors connected to the end result.

In August 2020, Slights accepted a US$ 60 million negotiation for Tesla investors that tested the company's purchase of SolarCity however the settlement only put on the board of supervisors, with Musk's participation accepted a different situation.

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