Texas would be the proper venue for claims of corporate wrongdoing by Elon Musk as Tesla Inc. ‘s CEO, Delaware’s elite trial-level business court ruled Monday, dismissing litigation filed just as the electric vehicle-maker reincorporated in 2024. “I will not second-guess Tesla stockholders’ chosen forum by purporting to weigh the advantages and disadvantages of Texas law and procedure relative to ...
Texas would be the proper venue for claims of corporate wrongdoing by Elon Musk as Tesla Inc. ‘s CEO, Delaware’s elite trial-level business court ruled Monday, dismissing litigation filed just as the electric vehicle-maker reincorporated in 2024. “I will not second-guess Tesla stockholders’ chosen forum by purporting to weigh the advantages and disadvantages of Texas law and procedure relative to our own. The owners of the corporation voted to require that derivative litigation be filed in a Texas forum. On the present facts, it is not inequitable to enforce their decision,” Vice Chancellor Bonnie W. David said in a 25-page opinion. Her ruling disposes of three separate shareholder derivative suits consolidated before her. Musk moved Tesla to Texas after the Chancery Court’s chief judge, Chancellor Kathaleen St. Jude McCormick, twice rejected his CEO pay package. The Delaware Supreme Court restored that 2018 compensation deal in a December ruling. The e-vehicle maker argued in October—while the cases were still before McCormick—that shareholder-approved by-laws requiring the application of Texas law to derivative lawsuits after its reincorporation should also apply to litigation that was pending in Delaware when the move occurred. Facing allegations of bias from attorneys for Musk and Tesla, McCormick used Scrabble board game tiles drawn from a bag to reassign remaining litigation related to the car-maker and the world’s richest person. David’s ruling came without additional arguments or briefing in the combined multiple lawsuits over Musk’s alleged insider trading, his acquisition of then-Twitter Inc., and his focus on artificial intelligence. The shareholders attacked Tesla’s Texas redomestication, “but they do not argue that Tesla’s stockholders were misled about the effect of the Texas Forum Bylaw in requiring derivative litigation to be brought in Texas rather than Delaware courts,” David said. Tesla is represented by Sullivan & Cromwell LLP, DLA Piper LLP (US)...