Here it is—a question from her Honor...

The Chancellor calls a fifteen minute break, but has a question for the defense to answer when they return.

Plaintiff argues that one disclosure violation is a kill shot.

She tells the defense that she didn't see a meaningful discussion of that argument in their briefs. "I could have missed it, but I would like you to address that in your argument."

Let's see how they respond. Back in 15. I have no idea how time is working here.

37/

Ok, we are back. Somewhat surprisingly, they are not going to address her question first, which seems like ... an interesting choice.

38/

Her response to their decision not to address her question right off the bat should tell you everything you need to know about their decision not to address her question right off the bat.

She said "I'll let you [address it last (at the end of your presentation) but ..."

So now they have jumbled up their response order substantively, but also are not going to address her question directly firstly, which is such a bad choice imho, I really do not understand.

39/

Taking a condescending approach to the Chancellor is a choice.

Also, thank you for your answer that you don't actually have a response.

IT IS SO NOTED.

40/

In comes the Chancellor. There's a lot of nuance in her assessment of his argument about how she characterizes the way he's presenting the "give and the get" re process disclosures but she's skeptical of how he's bringing it to her. She's not going to be steamrolled here, obviously, but it's not clear to be defendants are aware.

She says again now: I have some ideas of my own, but explain again to me why you think process disclosures are less significant in this context.

41/

This is all very, very interesting.

The Chancellor asks defendants whether, by analogy, process disclosures would be less important in a situation of a buyout where there's a controller seller.

There is a lot going on here. I'm going to have to unpack some of this after the fact to avoid getting bogged down here with backstory on process disclosures.

42/

The idea that Elon Musk is not a controller is so absurd. It's so condescending.

43/

The Chancellor asks what the reality is about his voting rights.

She asks what the math says. He has less than a third and it's not veto power. She wants to know what it means with respect to people not likely to vote, etc.

44/

The idea that they had to give him all the money in the world because they couldn't live without him but that it's also not "his company" and he doesn't control it. How do you square those two things?

45/

This is a lot of time to spend on the controller issue, to be honest, since there are a lot of ways they can lose this case before getting to this issue.

46/

"Are the directors beholden to Mr. Musk because he made them rich?"

"We believe the answer is no."

Did he answer her question yet? 🧐

47/

As the Chancellor said, "I might have missed it" but I didn't hear him answer her question. Did I miss it? Did I blink?

48/

The Chancellor:

"You've done a clever thing here. You have divided your presentation by sources of influence as opposed to the aggregate of those influences on each individual director. But to be clear, defendants don't concede the independence of any of the directors from Mr. Musk, correct?"

Defendants say they will get to that shortly.

49/

It secures Mr. Musk's full focus in transforming Tesla.

Oh, really?

50/

He goes to answer her question and she interrupts with a new one:

Chancellor: Plaintiff argues that potential conflicts can alter the total mix of information. Do you agree?

If there's a real potential, yes, I would agree. But total mix means total mix that is important to the vote that is to be taken.

She says he can continue to answer her question.

51/

"Is identifying a material misstatement in the proxy a kill shot?"

He says he addresses this in the brief. He says there doesn't appear to be any precedent to what the Court needs to do here, because it's in the discretion of the Court, because it's an equitable remedy.

He cites to SolarCity, which said the proxy was shitty, and still went to entire fairness, which is A HELLA TAKE OMGGGG.

52/

I have so much to say about the last take.

Mr. Musk would have an unjust enrichment/quantum meruit claim, which I would absolutely love to see it.

53/

She almost interrupts him, but stops.

"So, plaintiff argues that if there are material issues with the disclosure, it invalidates the award, full stop. And there's an elegance to the simplicity of that analysis, which is why I'm skeptical of it. And you're saying that I need to move toward entire fairness, what's your best case for that?"

He asks if he can send her a letter, and again cites SolarCity.

54/

She says that there are no cases cited on the pages that defendants provided. He says it falls back to general principles of equity.

He says entire fairness therefore applies from equity.

55/

Defendants argued at one point in that colloquy that Tesla predicated the grant on a stockholder vote within twelve months and I swear to g-d he just said that they held a stockholder vote, so that condition was met. I promise, that's what he said, as though the vote, basically irrespective even of the outcome (???) or the conditions of the proxy or anything would be irrelevant? I can't even.

56/

Holy shit.

The Chancellor just straight up asked:

"Who proposed the structure?"

To counsel. In Court.

Can I love this woman? Is that wrong?

I mean, it's all so simple. It's so straightforward. It's just so basic.

But it's like the State of Maine's slogan, its: "The Way Life Should Be"™️

57/

This lawyer is excellent, no doubt. But her confidence is still sometimes overstating the facts in a way that I don't think does her case justice in front of the Chancellor.

58/

Oooooooh, yes.

The Chancellor notes that it was partly Musk who pushed the negotiations part-way through.

59/

Ok, she didn't exactly note that explicitly, but she obliquely points her question against the assertion that the board pushed the timeline out because they were so diligent in needing more time to do such good work. This lawyer likes to say that everything plaintiff says is "telling".

60/

It's really unfortunate that we don't get to see these demonstratives or trial exhibits. ::le sigh::

61/

It would be dangerous to drink every time she says something that plaintiff said was "telling" unless you wanted to be very, very drunk.

The point here is you have to treat Mr. Musk the way you have to treat Mr. Musk because he's a special boi, and that's just how negotiations go with special bois in the modern age. And you don't do it by nickel and dime'ing a billionaire, you do it by coddling their needs to a large extent.

62/

So, like, is Evan Chesler just not presenting today? What is time even? Was this always going to be some weird, super-long over-sized bizarre length hearing the likes of which I've never seen?

63/

Ok, here he comes. He gets four seconds.

64/

He starts with "left it to the old guy to run fast at the end."

Chesler says that the thing is about price and he says that the "key case" and the Chancellor interrupts and says "you'll have to tell me which key case" and to preview the end, she says she will want supplemental briefing, which means we are going to have some more months with this case after all.

65/

This was absolutely a foreseeable outcome here, but it's definitely not good news if you are Mr. Elon Musk.

66/

Oh boy, Evan pounding the table about Elon Musk is—I don't think—going to impress anyone any more.

67/

"Our entire space program is being driven by SpaceX."

Sir, this is a Wendy's.

68/

Mr. Chesler says that Mr. Chesler has houses nicer than poor Mr. Musk with his 500 sq. ft. house in Boca Chica, and the Chancellor says that she "has no doubt that is true."

69/

Even Chesler is a True Believer™️ and he is Big Mad™️ at anyone who would question the TechnoKing's™️ Absolute Genius™️ in any way.

70/

Or he is a Very Good Actor™️. 🥲

71/

Your Honor, we are definitely really for real going to do Opening, Response, Reply, and Rebuttal.

Ok, attorneys, and I'm going to have a unicorn and a flying pony, and a 500 square foot shack in Boca Chica right next to Elon Musk's just as soon as you get good at time management.

72/

I didn't hear what the Chancellor just said about the share price, she was cutting out a little. 🥲

Chesler is going over some of the high points, I think he has five minutes left, I guess she was just always planning to go to 4:45pm with a 15 minute break, makes sense. Their reply and rebuttals were mere pipe dreams. 😶‍🌫️

"Are you willing to give the give, to get the get? That's what they were voting on."

73/

"How could this be easy? They say 'the S-curve.' C'mon. Everything is easy in the rear-view mirror, not in the front view.

Why were all the geniuses on Wall St. shorting this company?

They were betting against them, because they beat the odds."

74/

"Ambition is not the same as expectation."

"Ahuja and the others didn't want to be paid that way because the metrics were too hard. What better evidence is there that it was hard?"

Restaino said it was "not exceedingly hard." That's the best they could get.

Chesler asks for two more points. She doesn't respond audibly but presumably nods her acquiescence.

75/

Chancellor:

I'd like supplemental briefing.

Plaintiff's lead argument is the idea that one disclosure decision that meets the materiality standard is a kill shot.

There are other issues that have come up today. I would like defs' best cases on the give/get, not only in the disclosure context, but also on the fair price.

The amicus briefs came in, and they weren't directly addressed, you can address them in supplemental briefing.

She will issue a letter if other things come up.

/fin