Delaware’s Supreme Court has upheld a judge’s decision in favor of Tesla CEO Elon Musk in a lawsuit challenging the electric car maker’s $2.4 billion acquisition of a solar panel company founded by two of his cousins.
The court on Tuesday rejected arguments from a group of Tesla shareholders that a Chancery Court judge erred in finding that Tesla’s deal to acquire SolarCity in 2016 was “entirely fair.” The judge made that determination even while finding that the process by which Tesla’s board of directors negotiated and recommended the deal to shareholders was “far from perfect.”
While noting errors in the trial court’s fair price analysis, and agreeing that the deal process was not “pitch perfect,” the justices said the record is replete with factual findings and credibility determinations indicating that the acquisition was “entirely fair.”
“We are convinced, after a thorough review of the extensive trial record, that the trial court’s decision is supported by the evidence and that the court committed no reversible error in applying the entire fairness test,” Justice Karen Valihura wrote in the court’s 106-page opinion.
Typically, under Delaware’s “business judgment” rule, courts give deference to a corporate board’s decision-making unless there is evidence that directors had conflicts or acted in bad faith. If a plaintiff can overcome the business judgment rule’s presumption because the deal involved a controlling shareholder or because directors might have been conflicted, the board’s action is subject to an “entire fairness” analysis. That shifts the burden to the corporation to show that the deal involved both fair dealing and fair price.
At the time of the acquisition, Musk owned about 22% of Tesla’s common stock and was the largest stockholder of SolarCity, as well as chairman of its board of directors.
The justices concluded that the findings by former Vice Chancellor Joseph Slights III, which were not challenged by the shareholders, support the conclusion that the overall deal process was the product of fair dealing. The Supreme Court also said that, while Slights failed to explain why and how he relied on Solar City’s stock price on the day the deal was announced, rather than the lower price on the day the deal closed, his fair price analysis did not amount to reversible error.
“The Court of Chancery, after examining all of the expert testimony and fair price evidence, found that the fair price case was not even close,” Valihiura noted.
An attorney for the shareholders argued in March that the Chancery Court judge put too much emphasis on the price Tesla paid for SolarCity, and not enough on the deal process, which the plaintiffs contend was tainted by the failure to appoint an independent committee to negotiate the deal. He also argued that the judge’s analysis of the deal price was flawed and that shareholders who voted to approve the deal were not properly informed, even though the vote was not required under Delaware law.
Prosecutors plan to seek a decades-long prison sentence for a man who is expected to plead guilty this week to opening fire in a subway car and wounding 10 riders in an attack that shocked New York City.
Frank James, 63, is scheduled to enter a guilty plea on Tuesday in Brooklyn federal court, admitting that he was responsible for the April 12 attack. It set off a massive 30-hour manhunt that ended when he called the police on himself.
Prosecutors told Judge William F. Kuntz II in a letter late last week that they plan to ask him to go beyond the roughly 32-year to 39-year sentence that federal sentencing guidelines would recommend. James planned the attack for years and endangered the lives of dozens of people, prosecutors said in the letter.
Defense attorneys did not immediately respond to a request for comment on Monday, when courts were closed to observe the New Year’s holiday.
James had been scheduled to stand trial in late February.
His lawyers informed the judge on Dec. 21 that James wanted to plead guilty. Prosecutors say he plans to plead guilty to 11 charges without a plea agreement.
Ten of those charges — each one corresponding to a specific victim — accuse him of committing a terrorist attack against a mass transportation system carrying passengers and employees.
State and military police were sent Tuesday to keep people off Buffalo’s snow-choked roads, and officials kept counting fatalities three days after western New York’s deadliest storm in at least two generations.
Amid some signs of progress — suburban roads reopened and emergency response service was restored — County Executive Mark Poloncarz warned that police would be stationed at entrances to Buffalo and at major intersections to enforce a ban on driving within New York’s second-most populous city.
“Too many people are ignoring the ban,” Poloncarz, a Democrat, said at a news conference.
The National Weather Service predicted that as much as 2 inches (2.5 to 5 centimeters) more snow could fall Tuesday in Erie County, which includes Buffalo and its 275,000 residents. County Emergency Services Commissioner Dan Neaverth Jr. said officials also were somewhat concerned about the potential for flooding later in the week, when the weather is projected to warm and start melting the snow.
The rest of the United States also was reeling from the ferocious winter storm, with at least an additional two dozen deaths reported in other parts of the country, and power outages in communities from Maine to Washington state.
A suburban Toronto man who was killed by police after authorities say he fatally shot five people in his condominium building, including three members of the condo board, had a court hearing scheduled for the next day to determine if the building’s management could evict him.
Francesco Villi, 73, attacked neighbors on three floors of his building on Sunday night, killing three men and two women and wounding a sixth person, a 66-year-old woman who is expected to survive, according to police. One of the officers who responded to a call about an active shooter inside the building in the suburb of Vaughan shot and killed Villi, authorities said.
The attack happened the day before a scheduled online court hearing in which lawyers for the condominium corporation were set to argue that it should be allowed to evict Villi because he had spent years harassing building employees, board members and other neighbors. In court documents, the building’s lawyers said Villi ignored court orders to end the harassment and stop posting online about a longstanding dispute he had with the condo’s management.
Villi long claimed in videos posted on social media and in court documents that vibrations, noises and emissions from the building’s electrical room under his unit were making him sick, and that board members and the building’s developer were to blame.
According to court documents, at least two condominium managers quit because of him, and security guards quit or changed shifts to avoid him. Residents also said Villi would swear at them and film them.