Tesla trial pauses as attorney for the plaintiffs VOMITS in the juror box during Elon Musk’s testimony – after the CEO arrived in a Tesla Y flanked by security guards and with a SpaceX Starship screensaver on his phone
- Musk testified for a second day on Tuesday for trial in Delaware chancery court
- Tesla shareholders are suing over $2.6B merger with SolarCity in 2016
- Company was founded by Musk’s cousins and he owned a 22% stake as well
- Yet it has never turned a profit and shareholders call acquisition a boondoggle
- Musk testified that he did not dictate the terms of the deal to Tesla’s board
An attorney for the shareholders suing Tesla has thrown up in court while Elon Musk testified, temporarily halting proceedings on the second day of the civil trial over the company’s $2.6 billion merger with SolarCity.
The proceedings on Tuesday in Wilmington, Delaware were briefly interrupted when an unidentified lawyer vomited in the jury box, which is being used by court officers during the bench trial. Building security said the trial would resume in two hours.
Wearing a dark suit, white shirt and black tie, Musk arrived at chancery court in a Tesla Model Y, flanked by private security, with the SpaceX Starship visible on his phone’s lock screen.
Taking the stand, Musk defended his handling of the SolarCity deal, denying claims that he dictated a price the electric vehicle maker would pay for the ailing solar panel maker founded by his cousins.
For a second day, a pugnacious Musk sparred with Randall Baron, the plaintiffs’ attorney who has been grilling him about his role in orchestrating the SolarCity deal.
‘Your questions,’ the billionaire CEO complained from the witness stand, ‘are so deceptive.’
Wearing a dark suit, white shirt and black tie, Musk arrived at chancery court in Wilmington, Delaware on Tuesday in a Tesla Model Y
The proceedings on Tuesday in Wilmington, Delaware were briefly interrupted when an unidentified lawyer (not pictured) vomited in the jury box. Food poisoning is suspected
For a second day, a pugnacious Musk sparred with Randall Baron, the plaintiffs’ attorney who has been grilling him about his role in orchestrating the SolarCity deal
Taking the stand, Musk defended his handling of the SolarCity deal, denying claims that he dictated a price Tesla would pay for the ailing solar panel maker founded by his cousins
On Musk’s phone lock screen, an image could be seen depicting SpaceX’s Starship
The lawsuit by union pension funds and asset managers alleges Musk strong-armed Tesla directors in 2016 into rescuing SolarCity from the brink of bankruptcy, benefiting Musk.
Musk at the time of the deal owned a 22 percent stake in both Tesla and SolarCity, which was founded by his cousins Peter and Lyndon Rive.
The Tesla shareholders want Musk to be ordered to return the value of the deal to Tesla — which would result in one of the largest personal judgements of all time if they are successful.
The two-week trial in the Court of Chancery in Wilmington, Delaware, kicked off Monday and is being overseen by Vice Chancellor Joseph Slights.
On Tuesday, shareholder attorney Baron pressed Musk to explain meeting notes taken by a financial advisor showing Musk suggested the board offer a $28.50 share price for SolarCity.
Baron asked whether that conflicted with Musk’s statement that he had fully recused himself from negotiations.
‘I was making the obvious point that any offer, if not publicly defensible, will be rejected by SolarCity shareholders,’ Musk said.
Witness and lawyer clashed down to the meaning of the word ‘cabal,’ which Baron invoked to characterize the Tesla team that was updating Musk daily in July 2016 in the progress toward a SolarCity deal.
When Musk objected that ‘cabal’ sounded sinister, Baron countered that it typically meant a group of people working together toward a common purpose.
‘Usually not in a good way,’ Musk muttered.
Rejecting any notion that he pressed Tesla’s board to pursue a takeover of SolarCity, Musk, who is well-known for his commanding management style, insisted he had ‘no material role’ in Tesla’s board discussions about the deal.
Elon Musk arrives in a Model y to take the stand to defend Tesla Inc’s 2016 deal for SolarCity, a renewable energy company that investors allege was teetering on the brink of bankruptcy
Elon Musk, chief executive officer of Tesla, arrives at court during the SolarCity trial in Wilmington, Delaware on Tuesday
Musk took to a witness stand Monday to defend his company’s 2016 acquisition of a troubled company called SolarCity against a shareholder lawsuit that claims he’s to blame for a deal that was rife with conflicts of interest and never delivered the profits he had promised
Elon Musk arrives at New Castle County Courthouse in Wilmington, Delaware on Tuesday
Central to the case are claims that despite owning only 22 percent of Tesla, Musk was a controlling shareholder due to his ties to board members and domineering style.
Lawsuit claims Tesla deal was unfair to shareholders
The lawsuit filed by union pension funds and asset managers alleges Musk strong-armed Tesla’s board to buy SolarCity for $2.6 billion in 2016, just as it was about to run out of cash.
Musk owned a 22 percent stake in SolarCity, which was founded by his cousins Peter and Lyndon Rive.
Central to the case will be allegations that Musk, who also had a 22 percent stake in Tesla at the time of the deal, was nonetheless a controlling shareholder.
Shareholders asked the court to order Musk, one of world’s richest people, to repay to Telsa what it spent on the deal, which would represent one of the largest judgments ever against an individual.
If plaintiffs can prove this, it increases the likelihood that the court will conclude the deal was unfair to shareholders.
The celebrity chief executive spent about six hours on the stand on Monday, mostly under heated cross-examination by Baron, insisting the Tesla board handled the SolarCity deal and said that he was not part of the committee that negotiated the terms.
His testimony Monday devolved into a tense back-and-forth with shareholder attorney Randy Baron, whom Musk called ‘reprehensible’ at a testy 2019 deposition, according to a transcript.
When Baron pressed Musk in court on why he didn’t like him, the CEO testily responded, ‘I think you are a bad human being,’ according to USA Today reporter Isabel Hughes.
‘Some of your questions,’ he told the opposing attorney, ‘are really tricky and deceptive.’
Musk responded to Baron’s yes-or-no questions with lengthy dissertations that seemed intended to frustrate the attorney, and at one point he accused Baron of being ‘mentored by criminals.’
Baron asked if the board vetted his Technoking title, which he gave himself in March.
‘It generated a whole bunch of free press and Tesla doesn’t advertise and it’s helpful to general sales,’ he said. He called the title a joke, adding: ‘I think I’m funny.’
In his testimony on Monday, Musk denied the deal was a bailout of SolarCity as Tesla shareholders have alleged.
‘Since it was a stock-for-stock transaction and I owned almost exactly the same percentage of both there was no financial gain,’ he said, responding to questions from his attorney.
Musk told the court that the Tesla board handled the SolarCity deal and he was not part of the board committee that negotiated the terms.
‘I don’t even know what happened,’ he testified.
‘I think you are a bad human being,’ Elon Musk told shareholders’ attorney Randy Baron in court on Monday. The cross-examination is depicted in the court sketch above
Musk’s testimony devolved into a tense back-and-forth with shareholder attorney Randy Baron (above), whom Musk called ‘reprehensible’ at a testy 2019 deposition
Musk (center) is seen with his cousins, SolarCity founders Peter Rive (left) and Lyndon Rive (right). Tesla faces a lawsuit claiming the acquisition of SolarCity was irresponsible
Musk testified that for years before the SolarCity deal he saw the solar panel company as a natural part of the transition to sustainable energy.
He touted the deal at the time as central to his ‘Master Plan, Part Deux,’ which aims to reshape transportation by using sustainable energy to power fleets of self-driving electric vehicles.
Musk was initially questioned for about an hour by his attorney, Evan Chesler, who asked him to describe his relationship with the board.
‘I´d say good,’ Musk replied. ‘They work hard and are competent. They provide good advice and are rigorous in acting on behalf of shareholders.’
He said he did not set pay for directors or have the ability to fire or hire them, and that they negotiated the SolarCity deal and its economic terms without his influence.
On cross-examination, shareholder attorney, Baron warned Musk that ‘we plan to spend a lot of time with you. It’s going to be a grind.’
Musk grimaced, poked at the six-inch thick binder exhibit and replied ‘I can tell by the binder.’
Legal experts said the judge will be looking for evidence that Musk threatened board members or that directors felt they could not stand up to him.
Board members and others involved in the 2016 deal, including Musk’s younger brother Kimbal, will testify beginning as soon as Tuesday.
The company’s directors settled allegations from the same lawsuit last year for $60 million, paid by insurance, without admitting fault.
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