Delaware Business Litigation Report

Chancery Addresses Multiple Discovery Scuffles in Twitter and Musk Litigation

Twitter Inc. v. Elon musk et al., C.A, No. 2022-0613-KSJM (Del Ch. Aug. 23, 2022)
Twitter Inc. v. Elon musk et al., C.A, No. 2022-0613-KSJM (Del Ch. Aug. 25, 2022) Letter Decision Resolving Plantiffs' Second Discovery Motion
Twitter Inc. v. Elon musk et al., C.A, No. 2022-0613-KSJM (Del Ch. Aug. 25, 2022) Letter Decision Resolving Defendants' Second Discovery Motion
Twitter Inc. v. Elon musk et al., C.A, No. 2022-0613-KSJM (Del Ch. Aug. 25, 2022) Letter Decision Resolving Defendants' Third Discovery Motion
Twitter Inc. v. Elon musk et al., C.A, No. 2022-0613-KSJM (Del Ch. Sept. 7, 2022) Letter Decision Denying Defendants' Motion for Reargument
Twitter Inc. v. Elon musk et al., C.A, No. 2022-0613-KSJM (Del Ch. Sept. 7, 2022) Letter Decision Resolving Defendants' Motion For Leave To Amend And Extend Case Schedule
Twitter Inc. v. Elon Musk et al., C.A. No. 2022-0613-KSJM (Del Ch. Sept 7. 2022) Letter Resolving Fourth Discovery Motion
Twitter Inc. v. Elon Musk et al., C.A. No. 2022-0613-KSJM (Del Ch. Sept 7. 2022) Letter Decision Resolving Defendants Fourth Discovery

During its pendency, the suit by Twitter to compel Musk to complete his $44 billion purchase of the company produced several discovery rulings illustrating the Court of Chancery’s rules and practice. 

With an August 23 letter ruling, the Court declined to hold, for the time being, that defendants had waived their objections by employing allegedly aggressive discovery tactics, including relevance objections to requests targeting “obviously relevant” discovery material, citing defendants’ effort at voluntary compromise.  The Court, however, compelled defendants to identify persons with knowledge of, or involvement in, key issues and events, and to respond to discovery requests related to Musk’s co-investors, overruling defendants’ generalized burden and proportionality objections.

With an August 25 letter ruling, the Court permitted Twitter discovery into certain analyses by non-testifying experts.  Defendants previously received raw platform and user data from Twitter and engaged data scientists to analyze that material.  They used the resulting reports as the basis for their attempt to terminate the merger agreement, resulting in the lawsuit.  Twitter made discovery requests regarding the data scientist documents and research, but the defendants asserted work product and non-testifying expert protections.  Non-testifying expert materials generally are protected from discovery, so as not to discourage parties from seeking expert consultation.  However, Court of Chancery Rule 26(b)(4)(B) does allow such discovery under “exceptional circumstances,” where the party seeking discovery would not be able to obtain facts or opinions on the subject matter by other means.  Here, the Court found that, while the engagement of the data scientists indicated they were non-testifying experts retained in anticipation of litigation, they also were fact witnesses as to their analyses and the results, and the plaintiff entity must have access to the analyses to assess the merits of defendants’ arguments to terminate the merger.  Therefore, the “exceptional circumstances” standard warranted the disclosure of the analyses, subject to work product objections for specific documents.

With another August 25 letter ruling, the Court disallowed the full scope of discovery the defendants requested regarding Twitter’s user accounts for the purpose of exploring the percentage of so-called “bots.”  Rather than require the production of a vast amount of data, the Court ordered the production of a large sample data set “snapshot” associated with a 2021 audit to make the same assessment.  The production of this abridged data set still represented a burdensome undertaking but, in the Court’s view, was proportional to the case’s needs.

With a September 7 letter ruling, the Court addressed the parties’ dispute over the number of custodians for which Twitter must produce Slack messages.  Messaging platforms present different search and collection challenges from email systems, and parties will often negotiate a smaller subset of custodians from which to collect chat messages.  Twitter agreed to produce Slack messages for 6 of its 42 custodians, while the defendants insisted that Slack messages for all 42 custodians were necessary.  In meeting and conferring, however, defendants had offered to limit their request to 8 custodians, only to later re-trade on the offer in motion practice.  While offers of compromise do not preclude ultimately seeking full relief, the Court considered the defendants’ offer a good-faith compromise that would be fair to enforce in the circumstances of the burdensome discovery already imposed on Twitter.   

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