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In a recent legal development, a California state judge ruled that the ongoing $90 million legal dispute between Elon Musk and the renowned law firm Wachtell, Lipton, Rosen & Katz will be adjudicated by arbitrators rather than court proceedings.
Elon Musk’s Lawsuit and Allegations
Elon Musk, who famously acquired Twitter and subsequently rebranded it as ‘X,’ filed a lawsuit against Wachtell in July, seeking to recover $90 million in fees. Musk alleged that the law firm, which represented Twitter during the acquisition, received an “improper bonus payment in violation of its fiduciary and ethical obligations to its client.”
Musk’s lawsuit contended that Twitter executives engaged in excessive spending by designating millions of dollars as ‘success’ or ‘project’ fees in the lead-up to the company’s sale. In his complaint, Musk claimed that Wachtell orchestrated these payments to boost their financial gain while the keys to Twitter were being handed over.
Judge’s Ruling for Arbitration
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In a crucial legal turn, Judge Richard Ulmer of the San Francisco Superior Court ruled in favor of Wachtell’s argument that the parties involved had explicitly agreed to allow an arbitrator to determine which claims should be subject to arbitration. The decision to compel arbitration was accepted during a recent hearing, with neither party challenging this course of action. Notably, Judge Ulmer did not delve into the merits of Musk’s allegations, which Wachtell has vehemently denied.
Wachtell’s Response and Silence
Wachtell, a prominent New York-based law firm well-known for its expertise in mergers and acquisitions, has remained tight-lipped regarding the recent developments. Their spokesperson declined to offer any comment on the matter. Conversely, Musk’s legal team has not responded to requests for comment.
Twitter’s Board and the Firm’s Fee
In their defense, Wachtell argued in court that Twitter’s board had “determined and approved the firm’s fee.” They contended that this fee arrangement was instrumental in ensuring that Musk upheld his merger agreement, thus preserving significant value for Twitter’s stockholders.
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