Musk, KKR Lawsuits Traded by Judges Over Conflict Concerns (1)

A Delaware judge Monday reassigned litigation over a $720 million payout to KKR & Co. insiders, completing a swap with the judge who recently stepped away from a batch of cases targeting Elon Musk.

Vice Chancellor Bonnie W. David responded to conflict-of-interest concerns by handing the KKR case to Chancellor Kathaleen St. J. McCormick, who recently sent the Musk lawsuits to David after he raised bias allegations. David swiftly dismissed the Musk suits from Delaware’s Chancery Court, effectively sending them to Tesla Inc.'s new home, Texas, where corporate cases are harder for shareholders to bring and win.

Musk’s judicial recusal gambit immediately sparked fears that other aggrieved businesses or billionaires might follow his lead, a possibility David addressed head on in Monday’s ruling.

“As officers of the court, Delaware lawyers owe a duty not to seek judicial reassignment to obtain a perceived litigation advantage,” the judge wrote. “I am hopeful that this motion is an outlier.”

The KKR dispute, which began in 2024, is part of a wave of litigation challenging conversions by umbrella partnerships—including two other private equity giants, Apollo Global Management Inc. and Carlyle Group Inc.—into ordinary corporations. The suits say influential insiders manipulated transactions discarding the umbrella structure to seize a disproportionate share of the savings the firms recouped following changes to the tax code in 2018.

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The two case reassignments were parallel but far from symmetrical. The world’s richest person spent years slamming McCormick and trying to incite a mass “DExit” from the state after she voided his $56 billion compensation. Lawmakers spooked by the attacks scrambled to lower the guardrails around powerful founders, and Delaware’s top court later reinstated the record pay plan.

McCormick finally stepped away from Musk’s remaining cases after he scored a hit with his allegation that she’d endorsed a LinkedIn post taunting him. The judge—who has said she engaged with the social media post accidentally if at all—presided over an ad hoc reassignment procedure using Scrabble tiles.

The decision to let go of the KKR litigation involved far less drama, but it was still unusual in a state where bids for judicial recusal are exceedingly rare. The motion for disqualification by the pension fund suing KKR concerned David’s ties to her former firm, Skadden, Arps, Slate, Meagher & Flom LLP, which is representing the KKR conflicts committee that signed off on the payout and restructuring.

Although the investment firm and its co-founders fought the request—referring to it in a May 1 court filing as an act of “gamesmanship” that failed to raise any evidence of “genuine bias"—David granted it with little fanfare, citing Delaware’s judicial ethics code. Her initial order said the case would be randomly reassigned, but a subsequent docket entry indicated it landed with McCormick.

The Steamfitters Local 449 Pension Fund is represented by Friedlander & Gorris PA, Robbins Geller Rudman & Dowd LLP, and Shobe & Shobe LLP. KKR, its founders, and other board members are represented by Richards, Layton & Finger PA and Simpson Thacher & Bartlett LLP.

The case is Steamfitters Local 449 Pension Fund v. Kravis, Del. Ch., No. 2024-0808, 5/4/26.