This Week in Chancery Court: Ex-Twitter CEO, Pirate Shipwreck

The ex-CEO of Twitter Inc., now known as X Corp., and other former top executives of the company—all ousted when Elon Musk took over the social media platform last year—sued in the Delaware Court of Chancery to recover over $1.6 million in legal fees arising from shareholder lawsuits and government investigations. The court’s chief judge will consider this week whether some of those fees and expenses are as “unreasonable” as Musk’s company claims.

There’s also a pirate shipwreck on the court’s calendar this week:

Monday: Buddenhagen v. Clifford, Del. Ch., No. 2019-0258, hearing 10/2/23.

At issue: Vice Chancellor Nathan Cook will hear closing arguments in a lawsuit accusing an undersea explorer of plunder and corporate piracy over the management of artifacts from an 18th-century shipwreck. The explorer, Barry Clifford, testified at trial in February that a 2018 merger of ventures related to the wreck of the Whydah Gally off Cape Cod, Mass., was intended to streamline operations and benefit stockholders who had volunteered services through decades of financial hardship. A shareholder who sued Clifford, Paul Buddenhagen, said during trial that the entities’ poor record-keeping seemed to “represent utter contempt for minority shareholders.” In post-trial briefs, Buddenhagen says Clifford and his late business partner looted artifacts and revenues from the shipwreck ventures in a “decades-long campaign of self-interested transactions and self-dealing.” Clifford’s response says that even if the court finds a breach of fiduciary duty, Buddenhagen hasn’t shown he’s owed any damages.

Court action: Post-trial arguments in Wilmington, Del.

Pirate Shipwreck Explorer Tells Court Treasure Wasn’t Lucrative

Monday: NuVasive Inc. v. Miles, Del. Ch., No. 2017-0720, trial 10/2/23.

At issue: Remaining claims in a long-running dispute between two spinal surgery device makers go to trial before Vice Chancellor Sam Glasscock III. The judge has narrowed the litigation three times, previously dismissing claims that Patrick Miles, the ex-president of NuVasive Inc., violated a noncompete clause by poaching trade secrets, former colleagues, and customers for Alphatec Holdings Inc. Claims that Alphatec aided and abetted Miles and violated California’s unfair competition law also were dismissed. What remains before Glasscock this week: claims of breach of fiduciary duty, tortious interference with contract, and deceptive trade practices.

Court action: Five-day trial begins Monday in Georgetown, Del.

Alphatec Ducks Part of Suit Over NuVasive President Who Defected

Tuesday: Agrawal v. Twitter Inc., Del. Ch., No. 2023-0409, hearing 10/3/23.

At issue: “Twitter’s cavalier handling of its advancement obligations toward Plaintiffs is part of a larger pattern of corporate misbehavior since the Company’s acquisition by Elon Musk for $44 billion. Put simply, the world’s richest person does not pay his bills,” the ex-executives said in a brief. A brief filed by attorneys for the company now known as X Corp. focused on the legal fees sought by Twitter’s former chief legal officer, Vijaya Gadde, which they call “unreasonable in the extreme.” The parties have reached an agreement on some fees and expenses, according to a Sept. 28 order signed by Chancellor Kathaleen St. Jude McCormick, but she still has to decide the reasonableness of some costs sought by Gadde.

Court action: Hearing on motion for summary judgment in Wilmington, Del.

Ex-Twitter Executives Say Musk Still Owes Them for Legal Bills

Friday: Kuramo Africa Opt Master Fund II LP v. Seruma, Del. Ch., No. 2021-0323, oral argument 10/6/23.

At issue: A Kuramo Capital Management LLC fund wants to oust the manager of its investments in a Democratic Republic of the Congo palm oil plant over his alleged scheme to loot the business by restructuring a complex web of entities with overlapping ownership stakes. The parties went to trial in May, and McCormick now will hear closing arguments in the case. “This trial exposed the Kuramo Parties’ egregious conduct to deny the Nile Fund Parties’ rights to ownership, profits, and management fees that they have stolen,” and it’s time to hold them accountable, the defendants said in a post-trial brief. Those claims have little to do with what happened at trial, “where Kuramo presented overwhelming evidence—largely through contemporaneous documents—proving that (Larry Seruma of Nile Capital Management LLC) breached his fiduciary duties to Kuramo and committed fraud and fraudulent concealment,” the plaintiffs said in a responding brief.

Court action: Post-trial arguments in Wilmington, Del.

Kuramo Capital Accuses Congo Investment Partner of Looting Plant