A Delaware judge has sided with Elon Musk in a hefty lawsuit brought by Tesla shareholders, which accused the executive of coercing the electric vehicle company’s board into buying SolarCity back in 2016.
Seeking as much as $13 billion in damages, the shareholders alleged that Tesla’s $2.6 billion, all-stock SolarCity deal amounted to “a rescue from financial distress, a bailout, orchestrated by Elon Musk,” per a January statement from the plaintiff’s attorney, Randy Baron. While the court found that Musk “was more involved in the process than a conflicted fiduciary should be,” it ultimately ruled in favor of the “technoking” on all counts. Shareholders still have the option to file an appeal.
At the time of the deal, Musk’s connections to Solar City ran deep. The unprofitable solar energy firm was co-founded and co-led by Musk’s first cousins, Lyndon and Peter Rive, and Musk was Solar City’s largest shareholder and chairman.
“[The] Tesla Board meaningfully vetted the Acquisition, and Elon did not stand in its way,” read the opinion by Vice Chancellor Joseph Slights. “Equally if not more important, the preponderance of the evidence reveals that Tesla paid a fair price — SolarCity was, at a minimum, worth what Tesla paid for it,” Slights added.
The verdict is a clear win for Musk, but the court declined to force the shareholders to cover his legal fees. Slights concluded that the Tesla boss and Twitter suitor “likely could have avoided” the case in the first place, “had he simply followed the ground rules of good corporate governance in conflict transactions.”