Musk’s attorney testifies at Twitter takeover trial

SAN FRANCISCO (CN) — An attorney for Elon Musk took the stand Tuesday in a trial centered on Musk’s $44 billion buyout of Twitter in 2022.

Alex Spiro of Quinn Emanuel Urquhart & Sullivan told the eight-person jury about what happened at a May 6, 2022, meeting between Twitter executives and Musk’s team, as well as conversations he had with Twitter attorney Martin Korman of Wilson Sonsini Goodrich & Rosati in September 2022 while Twitter was pursuing litigation against Musk to force the deal to go through.

During cross-examination by plaintiff attorneys representing investors suing Musk, Spiro said he did not tell Korman that Musk wanted to renegotiate the Twitter deal and drop the lawsuit, but stopped short of saying Korman had lied.

Korman testified Monday that Spiro told him in a phone conversation that it would be “in everyone’s best interest” to settle the case and that if the deal was forced to go forward, Musk would have access to company records and “dig into whatever he wanted to dig into and that might not be comfortable for Twitter people and their heirs.”

“I definitely said most of that statement,” Spiro said, adding, “What I remember frankly was saying ‘this would go on forever.’ What I think happened is he is misremembering. I was talking about Musk’s heirs; they would never let it go. Once you uncover fraud, there is no statute of limitations.”

“There was a conversation, I don’t remember the word heir. I remember the concept, forever and ever, they would never stop. If they keep going into this, he has their emails; they have a major, major problem because it will not go away. It will go on forever,” he continued.

Investors, including lead plaintiffs Steve Garrett, Nancy Price, John Garrett and Brian Belgrave, sued Musk in 2022, accusing him of deliberately making misleading statements about the presence of spam bot accounts on Twitter to drive down the company’s stock, in hopes of backing out of the acquisition deal or renegotiating more favorably for himself.

The statements at issue include a tweet from May 13, 2022, where Musk said the Twitter deal was on hold, “pending details supporting calculation that spam/fake accounts do indeed represent less than 5% of users.” A couple hours later, Musk followed up with another tweet saying he was “still committed to acquisition.”

Twitter ultimately sold to Musk for $54.20 per share in October 2022, only closing after the company sued Musk to force the deal to go through.

U.S. District Judge Charles R. Breyer previously denied the plaintiffs’ motion to disqualify Spiro as lead trial counsel based on the argument that Spiro was also a witness in the case. The defense moved Spiro to a non-jury facing role during the trial, though the plaintiffs never called him as a witness.

During the seventh day of trial, Breyer told the parties that Spiro’s testimony would be limited to renegotiation discussions he had with Korman and the May 6, 2022, meeting. The judge denied the defense’s request to have Spiro testify about other topics, including Musk’s defense strategy in the lawsuit filed by Twitter.

“He is the most important witness in the case, no question,” Breyer, a Bill Clinton appointee, said. “However, his client has asserted attorney-client privilege, so his most important testimony he can’t testify to.”

Kate Claassen, a managing director at Morgan Stanley, which advised Musk on the Twitter deal, also testified, telling the jury that she initially had no doubts over Twitter’s estimates that false or spam accounts make up less than 5% of all accounts. However, she said she began to doubt the 5% bot claim after Musk could not get more information from Twitter about their user base and how they estimate spam accounts.

“Musk is buying a business and needs to have a financial model for this business. The number one driver of revenue is users. We needed to have models to go out for the debt committed to him to buy Twitter. We need to have information for the models so the day he takes the keys, he has payroll, he has bills to pay,” she said.

When asked by defense attorney Stephen Broome of Quinn Emanuel Urquhart & Sullivan if Musk or his team ever indicated he was second-guessing the deal or making false or misleading statements to get out of the deal, Claassen said that he did not.

“If you thought Musk engaged in a fraudulent scheme, what would you do?” Broome followed up.

“I would call legal counsel,” Claassen responded.

Representatives for both parties declined to comment. The trial scheduled to continue through March 16.

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