COURT OF CHANCERY
OF THE
STATE OF DELAWARE
KATHALEEN ST. JUDE MCCORMICK LEONARD L. WILLIAMS JUSTICE CENTER
CHANCELLOR 500 N. KING STREET, SUITE 11400
WILMINGTON, DELAWARE 19801-3734
September 22, 2022
Peter J. Walsh, Jr., Esquire Edward B. Micheletti, Esquire
Kevin R. Shannon, Esquire Lauren N. Rosenello, Esquire
Christopher N. Kelly, Esquire Skadden, Arps, Slate, Meagher & Flom LLP
Mathew A. Golden, Esquire 920 N. King Street, 7th Floor
Callan R. Jackson, Esquire Wilmington, DE 19899
Potter Anderson & Corroon LLP
1313 N. Market Street
Hercules Plaza, 6th Floor
Wilmington, DE 19801
Brad D. Sorrels, Esquire
Wilson Sonsini Goodrich & Rosati, P.C.
222 Delaware Avenue, Suite 800
Wilmington, DE 19801
Re: Twitter, Inc. v. Elon R. Musk et al.,
C.A. No. 2022-0613-KSJM
Dear Counsel:
This letter decision addresses the Second Motion for Leave to Amend Defendants’
Verified Counterclaims, Answer, and Affirmative Defenses filed by Defendants Elon R.
Musk, X Holdings I, Inc. and X Holdings II, Inc. (“Defendants”) on September 9, 2022. 1
Plaintiff Twitter, Inc. filed its opposition on September 21, 2022. 2 I assume that the reader
is familiar with the background of this dispute, so I will skip to the facts germane to the
motion at issue.
1
C.A. No. 2022-0613-KSJM, Docket (“Dkt.”) 440 (“Second Mot. to Amend”).
2
Dkt. 566 (“Opposition”).
C.A. No. 2022-0613-KSJM
September 22, 2022
Page 2 of 5
Defendants previously moved for leave to amend their Complaint on September 7,
2022, to add allegations concerning former Twitter employee Peiter “Mudge” Zatko’s
federal whistleblower complaint. 3 Through their Second Motion to Amend, Defendants
seek leave to allege facts revealed to Defendants for the first time on September 3, 2022,
regarding a June 28, 2022 severance agreement entered between Twitter and Zatko
reflecting a $7.75 million payment to Zatko. According to Defendants, Twitter did not
seek Defendants’ consent before making the payment to Zatko, although such consent was
allegedly required under Section 6.1(e) of the merger agreement.
Plaintiff does not oppose the Second Motion to Amend. This is wise given that
Court of Chancery Rule 15(a) provides that leave to amend should be “freely given when
justice so requires.” 4 This court interprets Rule 15(a) to “allow for liberal amendment in
the interest of resolving cases on the merits.” 5 Leave to amend is therefore typically
granted.
Plaintiff instead argues that granting the Second Motion to Amend should be
conditioned on Defendants’ compliance with Plaintiff’s additional discovery demands
relating to the motion. Specifically, Plaintiff has propounded two additional document
requests and one interrogatory.
The document requests sought:
3
See Dkt. 244, Ex. A.
4
Ct. Ch. R. 15(a).
5
Gould v. Gould, 2011 WL 141168, at *7 (Del. Ch. Jan. 7, 2011).
C.A. No. 2022-0613-KSJM
September 22, 2022
Page 3 of 5
All communications from December 1, 2021 through August
22, 2022 between Peiter Zatko or anyone acting on his behalf,
on the one hand, and Defendants or their Advisors, Lenders, or
Co-investors, on the other, and any documents reflecting,
referring to, or summarizing such communications, and
All communications sent or received by Defendants or their
Advisors, Lender, or Co-investors, from December 1, 2021
through August 22, 2022 that relate to Zatko or his July 6
complaint, including any of the allegations contained therein. 6
The interrogatory states:
State “yes” or “no” whether, during the period January 1, 2022
through August 22, 2022, any of Elon R. Musk; Jared Birchall;
any lawyer of Skadden, Arps, Slate, Meagher & Flom LLP that
did any work relating to Twitter for any of defendants; any
lawyer of Quinn Emanuel Urquhart & Sullivan, LLP that did
any work relating to Twitter for any of Defendants, or any
employee of Morgan Stanley that did any work relating to
Twitter for any of Defendants had knowledge, whether directly
or indirectly obtained from Zatko or any other source, of any
criticisms, allegation, opinion, or views relating to Twitter that
were made or held by Zatko or were attributed to Zatko, during
the period November 1, 2020 through August 22, 2022. 7
Defendants initially refused to provide this discovery on the grounds that it was
requested too late. 8 In addition, they objected to the portion of the interrogatory that asks
for information regarding Morgan Stanley; it is unclear whether they objected to the rest. 9
They initially objected to the document requests on the grounds that they had “no reason
6
Opposition, Ex F at 1.
7
Opposition, Ex. G at 5.
8
Opposition, Ex. A at 10.
9
Id. at 11.
C.A. No. 2022-0613-KSJM
September 22, 2022
Page 4 of 5
to think” that responsive documents existed. 10 Defendants then pivoted to say that
responding to the documents requests would be “unduly burdensome” to the extent such
requests covered communications by “Advisors, Lenders, or Co-Investors.” 11 Twitter
clarified its interrogatory and narrowed its document request. 12 Defendants again
objected. 13
It is unclear to me from the correspondence what Defendants are agreeing to
produce. Any reply filed by Defendants in further support of the Second Motion to Amend
should clarify their position.
In any event, the Second Motion to Amend is granted. Plaintiff’s request that the
court allow the amendment subject to conditions relating to discovery concerning the
amendment is reasonable. I have not yet determined what scope of additional discovery
should be permitted. The parties shall present argument on the scope of additional
discovery during the September 27, 2022 hearing.
IT IS SO ORDERED.
Sincerely,
/s/ Kathaleen St. Jude McCormick
Kathaleen St. Jude McCormick
Chancellor
10
Id.
11
Id. at 7–8.
12
Id. at 6–7; id., Ex. K at 1–2.
13
Opposition, Ex. A at 4–5.
C.A. No. 2022-0613-KSJM
September 22, 2022
Page 5 of 5
cc: All counsel of record (by File & ServeXpress)