🗞️ Elon's Twitter Backpedal, Expert Questioning & Texas v. Internet
This week: Elon argues material breach, the ethics of expert witnesses, and social media comes under renewed scrutiny. Plus, Big Law comes to the rescue of abortion rights, and the Supreme Court faces a historic backlog.
Not eight weeks since Elon Musk announced plans to buy Twitter and take it private, things are already (expectedly?) going haywire. For one, Musk himself wavered on the purchase, claiming concerns over Twitter bots and other fake accounts. And now a group of Twitter shareholders is suing the Tesla CEO for tanking the social media company's stock. “Musk’s conduct was and continues to be illegal, in violation of the California Corporations Code, and contrary to the contractual terms he agreed to in the deal” [to buy Twitter], the suit claims. Meanwhile, representatives for Musk claim Twitter is “actively resisting and thwarting” attempts by the billionaire to collect information before the deal is finalized.
The shareholders' suit alleges that, following the April 25 purchase agreement, “Musk proceeded to make statements, send tweets, and engage in conduct designed to create doubt about the deal and drive Twitter’s stock down substantially in order to create leverage that Musk hoped to use to either back out of the purchase or re-negotiate the buyout price,” reports The Verge.
In a May tweet, Musk said “20% fake/spam accounts, while 4 times what Twitter claims, could be *much* higher. My offer was based on Twitter’s SEC filings being accurate. Yesterday, Twitter’s CEO publicly refused to show proof of <5%. This deal cannot move forward until he does.”
But Twitter corporate refutes these claims, saying they “will continue to cooperatively share information with Mr. Musk to consummate the transaction in accordance with the terms of the merger agreement,” adding that both the deal and their cooperation “is in the best interest of all shareholders.”
Since announcing the takeover, Twitter's stock has fallen by up to 30%, while it currently trades at around 25% lower.
How To Undermine
In questioning the amount of fake Twitter accounts, some believe Musk is attempting to build a case that the material terms of the deal as presented by Twitter are incorrect, and thus the deal is void. “What he is actually doing is a much more clever attempt to get out of the merger agreement,” corporate law professor at Tulane, Ann Lipton, told the New York Times. “If Twitter were really stonewalling information requests, and those information requests were necessary or reasonable for Musk to be able to get his financing — which is what he’s claiming in this letter — then that would conceivably be a breach that allows Musk to walk away.” However, Edward Rock, a corporate law professor at NYU says that “the merger agreement provides for information, with exceptions, but that doesn’t mean he can get any information he wants … what I don’t know is what information he is asking for.”
We here at the Lawtrades’ Newsletter desperately want to stop giving Mr. Musk so much attention, yet, so long as every word that comes out of his mouth has the power to throw the stock market into disarray and bring a titan of Silicon Valley to its knees, we cannot. That being said, it increasingly seems like Musk was trolling us with his Twitter purchase announcement, and we hope this takes the value of any of his future comments down significantly.
🎧 What We’re Listening To
This week we’re listening to Zimoun, an artist, composer, and musician from Bern, Switzerland. Zimoun combines sound sculptures with sound architecture to form art installations from industrial materials and mechanical elements. His work has been featured in the US, Chile, Abu Dhabi, and all across Europe. Released in 2019, Guitar Studies I encapsulates his stripped-down take on the acoustic guitar.
By some estimates, expert witnesses are used today in 8 out of 10 trials in the United States. Their billings can be over $1,000 an hour, and easily hit six figures for murder trials or other high-profile cases. Welcome to the booming expert witness economy. But there's also an ethical quandary here. According to The Hustle, attorney John Lewis says “Experts who help lawyers win cases are often rewarded with more work and more money. They have a strong financial incentive to please the person paying their checks.” So, is this a corruption of justice for profit?
As far back as 1995, the University of Richmond law review wrote that “In two recent studies almost half of the lawyers questioned admitted to shopping for experts. In one of the studies, eighty-six percent of the lawyers identified the adamancy of the expert's support for the party's position as important or very important in selecting an expert.”
Wondering how much these witnesses make per hour? The Hustle reported that a horse expert is at the bottom of the range, making $225 an hour, and a hand surgery expert is the highest paid at $1,433 per hour.
Daubert v. Merrell Dow Pharmaceuticals, Inc.
While 1975 saw the creation of the Federal Rules of Evidence, it wasn't until 1993's Supreme Court ruling on Daubert v. Merrell that expert witnesses really took off in court settings. The court's ruling created the Daubert Standard which effectively states that evidence must be rooted in scientific knowledge, that it is the trial judge's discretion what qualifies, and that the evidence must have been arrived at by the scientific method.
If you’re paying me mid-six figures to make a claim, and I want to have more people in the future (including you) pay me to do the same, I will likely bend what I say to support you. So why do expert witnesses persist despite their shady ethics? Well, we all use them.
“Everyone wants to return to the office”
Oh, and there’s more where this came from. Follow us on Twitter for a full swath of hilarious legal tweets, memes, & more.
In a 5-4 vote last week, the Supreme Court struck down a controversial Texas law governing social media platforms. HB 20, as it is known, applies to online platforms of 50 million users or more (so, basically, Facebook/Instagram, Twitter, TikTok, and YouTube), and “largely [prohibits them] from removing posts based on the viewpoints they express, with exceptions for the sexual exploitation of children, incitement of criminal activity and some threats of violence.” In essence, Texas tried to make illegal the removal of bad actors from large social media platforms. The law was challenged by industry trade groups, reaching both the 5th and 11th courts of Appeals, which in turn handed down opposing rulings.
Justices John Roberts, Stephen Breyer, Sonia Sotomayor, Amy Coney Barrett, and Brett Kavanaugh voted in favor of blocking the law, which was in response to an emergency suit filed by the trade groups NetChoice and the Computer and Communications Industry Association (CCIA), reports The Verge.
Liberal Justice Elena Kagan joined conservative Justices Thomas, Alito, and Gorsuch in dissent of the stay, but did not explain her decision.
In his dissent, Justice Alito stated that the “issue is a ground-breaking Texas law that addresses the power of dominant social media corporations to shape public discussion of the important issues of the day.” He also addressed what he saw as a states' rights issue: “While I can understand the Court’s apparent desire to delay enforcement of HB 20 while the appeal is pending, the preliminary injunction entered by the District Court was itself a significant intrusion on state sovereignty, and Texas should not be required to seek preclearance from the federal courts before its laws go into effect.”
Where We Go From Here
“Are Facebook, Twitter, and YouTube so influential in our world that the government should restrain their decisions,” the New York Times asks, “or are they private companies that should have the freedom to set their own rules?” Currently, a law known as Section 230 of the Communications Decency Act protects social media sites from being held responsible for what is posted on their platforms, however, it is recently coming under new scrutiny. In 2020, Justice Clarence Thomas wrote that “in an appropriate case, we should consider whether the text of this increasingly important statute aligns with the current state of immunity enjoyed by Internet platforms,” and whether these sites are “sufficiently akin to common carriers or places of accommodation to be regulated in this manner.” Basically, the First Amendment should apply to Twitter, Facebook, et al.
No doubt that Big Tech has taken over our lives to the extent that makes them akin to the public sphere. Does that mean that anyone can say anything (no matter its effects) on one of these platforms because it’s protected by the First Amendment? Surely that’s going too far. But maybe it’s a good thing that we’ve gotten the ball rolling on the question of regulating Big Tech further.
📤 What Else We're Forwarding
Abortion Rights: 23 Big Law firms have signed onto the Legal Alliance for Reproductive Rights, a pro-bono service for those in need if/when Roe v. Wade is struck down, reports Above The Law. The legal alliance is being led by San Francisco city attorney David Chiu and includes firms like Willkie Farr & Gallagher, Crowell & Moring, and Morrison & Foerster.
SCOTUS Backlog: The US Supreme Court has the largest percentage of cases in backlog since at least 1950, says the ABA Journal. 33 opinions, or 53% of argued cases this year, remain before the Court's term ends over the next few weeks.
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See ya next week!