(Reuters) – A judge has thrown out a proposed class action lawsuit against Elon Musk that claimed he misled Twitter shareholders multiple times last year in the course of buying the social media company for $44 billion.
In a decision Monday, U.S. District Judge Charles Breyer in San Francisco said plaintiff William Heresniak had no standing to sue because he questioned the “mistakes associated with” the Musk purchase, not the fairness of the purchase itself.
Breyer said Heresniak was not hurt by Musk’s late disclosure of a 9.2% stake in Twitter, which the lawsuit claims allowed him to buy more shares at lower prices before the buyout was announced, or by the fact that the closure took place a month and a half later than planned. .
The judge also found no evidence that Musk helped two friends who were then on the board of Twitter, co-founder Jack Dorsey and managing partner of the Silver Lake private equity firm Egon Durban, to breach their fiduciary duties by favoring their own interests and those of Musk.
Breyer said letting Dorsey transfer his roughly $1 billion of Twitter shares into an equity stake in the new company simply reduced the amount Musk had to pay at closing and did not “unduly divert” money from other shareholders.
Heresniak’s attorneys did not immediately respond to requests for comment outside of business hours.
Musk also runs the electric car company Tesla Inc and is the second richest person in the world, 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 list of often irrelevant grievances against Elon Musk.”
Heresniak sued on May 25, 2022, a month after Twitter accepted Musk’s $54.20 a share offer to buy. The transaction closed on October 27.
Since then, Twitter has struggled to maintain ad revenue, with some advertisers raising concerns that the relaxed content rules could leave their ads associated with hate speech or other “bad messages.”
On May 12, Musk named former NBCUniversal publicity director Linda Yaccarino as the new CEO of Twitter.
The case is Heresniak v Musk et al, US District Court, Northern District of California, No. 22-03074.
(Reporting by Jonathan Stempel in New York. Editing by Gerry Doyle)
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