A place where the rules really apply to Elon Musk – La Tercera

Days before the wildest business saga of the year begins, a Delaware judge explained to a room full of lawyers how she saw her job.

Kathaleen McCormick, the chancellor of the state Chancery Court, said her goal was to be a “gentle judge” who listens to complex arguments and offers constructive feedback as these corporate litigators bring the country’s biggest settlements into her courtroom.

His judicial philosophy was about to be put to the test: A few weeks later, he met Elon Musk.

Chancellor McCormick is now presiding over the trial that will determine whether Musk goes ahead with his Twitter purchase deal. It’s a corporate drama that pits a company that inflames emotions against a titan that revels in chaos, but she has guided the problem toward a possible solution with a firm hand, while keeping the courtroom remarkably free of chaos. The richest person in the world appears to be on her way to paying $44 billion for something she apparently doesn’t want, because she collided with a reality she couldn’t bend to her will.

Musk has long behaved as if the rules did not apply to him. In his work, that audacity is necessary, and it has helped this iconoclast build cars and ventures that others dismissed as impossible. He also flouts authority, treats statutory tickets like speeding tickets, doesn’t keep promises from him, and generally acts like he can get away with it, which he usually does.

This time it could be different. It is not intended to colonize Mars respecting the laws of gravity. But on planet Earth, or at least in Delaware, the laws of business are still respected.

There has been so much noise surrounding Musk’s tumultuous Twitter persecution that Chancellor McCormick’s quiet role in handling the case has been drowned out. In her line of work, that means she was successful.

We appreciate people who break the rules. We hardly recognize the people who enforce them.

Chancellor McCormick, a 43-year-old Delaware-born woman who goes by the name Katie and was given the middle name of St. Jude for the patron saint of hope, made several key moves to prevent her living room from becoming a circus when the case of the repentant buyer Musk came to Delaware.

In Elon Musk’s line of work, boldness is required. PHOTO: JORDAN VONDERHAAR/BLOOMBERG NEWS

First, the court’s chief judge assigned the lawsuit to herself and spared her colleagues the workload under intense pressure. She then expedited the scheduled trial, because “the longer the merger operation remains in limbo, the greater the cloud of uncertainty that is cast over the company,” she wrote. It may seem like an obvious decision, but legal analysts say it was bold and demanding. “Saying in July that we’re going to have a trial in October is like saying we’re going to have a presidential election on Saturday,” said Minor Myers, a law professor at the University of Connecticut.

Those early actions set the tone for months of quick decisions on difficult matters that moved the case forward.

“He told both parties that this was going to be an orderly process, that they were going to be held accountable and that there was going to be no bullshit,” said Andre Bouchard, who preceded Chancellor McCormick at the top of the court.

Most analysts say Musk had a much weaker case, but Chancellor McCormick never made it seem that way, even when his decisions indicated he didn’t have much of a chance. He turned down many of the requests for data and documents from him that could have led to a wild goose chase. He also surprised observers last week by granting his motion to postpone the corporate trial of the century, after Musk promised to buy Twitter for $54.20 a share and honor the agreement he had already signed. Her attorneys said the deal would close around October 28, so she’s letting them do it before 5 pm that day, or else make plans for a November court date.

Nobody knows what can happen next. This is Elon Musk. I could get on a rocket tomorrow and tweet a poll asking if contracts apply in outer space. But you don’t have to be a law graduate to interpret Chancellor McCormick’s judicial ultimatum as a warning against mischief. “Woe to Elon Musk if this is some kind of joke,” Myers said.

The judge and representatives for Twitter and Musk declined to comment.

If they avoid the spectacle of a trial and Musk soon owns Twitter, as well as running Tesla and SpaceX – an “if” the size of his fortune – the big winner of a battle with many losers would be the Chancery Court.

This English-rooted courthouse in business-friendly Delaware is the neutral site for many of the nation’s nastiest business fights. Most public companies set up shop in Delaware to be assured of a smart judge, with good instincts and relevant experience, who will work 24 hours a day to arbitrate your legal fights. They mitigate the risks of a jury trial by relying on one of seven highly qualified specialized judges, led by Chancellor McCormick, to manage their disputes with the sophistication and urgency necessary when billions are at stake.

Not a place for poop emojis. It is a place for civil discourse and respectful argument, where rules matter and nothing is valued more than predictability.

The Court of Justice, in other words, is the opposite of Twitter.

1665700391 185 A place where the rules really apply to Elon Musk
The opposite of Twitter: the Delaware Chancery Court. PHOTO: MATT ROURKE/ ASSOCIATED PRESS

This idea that judges can be a stabilizing force in business is a duty that Chancellor McCormick takes seriously. The first woman to lead the Delaware Court of Chancery said at her 2019 inauguration, when she joined the judiciary, that it was a job she gladly offered herself for, and that at any time “the weight of responsibility inherent in a position of public trust could overshadow the sense of enthusiasm and optimism that I feel today.”

People who know Chancellor McCormick describe her as a tough but unassuming judge, allergic to drama and going about her business without fuss. Her profession rewards competence, not overconfidence, and that behavior helped keep a case involving Twitter and Musk under control.

“Anyone who underestimates her would be making a mistake,” Bouchard said.

Has some personality, but only when needed. In a case involving a cannabis company, for example, he opened his sentence by quoting the Grateful Dead (The lyrics were from “Keep Your Day Job” and footnotes cite songwriters “R. Hunter” and “J. Garcia”). When she ordered Musk to present information about the people with whom she had discussed the deal, Chancellor McCormick chided her lawyers for their “suboptimal” response, referencing the meme “you had one job”. I suspect even Musk was impressed.

But he used colorful rhetoric so infrequently that it had the desired effect when he did. He called Musk’s request for a mountain of Twitter records “absurdly broad,” suggesting it would require the company to “produce billions and billions of data points” and concluding that “no one in their right mind has ever attempted such an effort.” ”, which highlighted Chancellor McCormick’s impatience with the billionaire’s tactics. She was polite, but to the point.

He wasn’t just doing his job. She was fulfilling his goal.

And it turns out that there is one person who should appreciate this place where the judges still play by the rules.

“That will help the future Elon Musk,” said Columbia Law School professor Eric Talley. “Ten years from now, when you have a contract, what does your promise mean? If his case comes to Delaware, his promise means a lot,” he added.

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A place where the rules really apply to Elon Musk – La Tercera