| CASE CAPTION
|| In re Tesla Motors, Inc. Stockholder Litigation
|| Delaware Court of Chancery
| CASE NUMBER
|| Consol. C.A. No. 12711-VCS
|| Honorable Joseph R. Slights
|| Arkansas Teacher Retirement System (“ATRS”)
|| Elon Musk
Plaintiffs challenged the $2.1 billion acquisition of SolarCity, Inc. by Tesla Motors, which closed on November 21, 2016 (the “Acquisition”). Plaintiffs alleged that the Acquisition was essentially a bailout of the financially struggling SolarCity, which was founded and run by Elon Musk’s cousins. At the time of the acquisition, Elon Musk was chairman of both boards of directors and the largest stockholder of both Tesla and SolarCity. Plaintiffs alleged that Musk proposed the Acquisition in an effort to save SolarCity from going bankrupt, and the rest of Tesla’s board of directors approved the Acquisition despite knowing that it was not in Tesla’s best interests.
On October 19, 2016, ATRS and KTMC were appointed co-lead plaintiffs and co-lead counsel. On March 9, 2017, plaintiffs filed a consolidated complaint, naming Musk and the other Tesla directors as defendants. On March 28, 2018, the Court denied defendants’ motion to dismiss the case. Plaintiffs then took discovery, including reviewing 3 million pages of documents and taking 22 fact and expert depositions. Trial was originally set for March 16, 2020. After two mediation sessions, on January 22, 2020 plaintiffs agreed to settle the case for $60 million against all of the defendants except Elon Musk. On February 4, 2020, the Court denied motions for summary judgment. On August 17, 2020, the Court approved the partial settlement and set the case for trial against Elon Musk alone. On March 13, 2020, the Court adjourned the trial because of the COVID-19 pandemic.
Plaintiffs tried the case as a bench trial before the Court from July 12 to July 23, 2021. Plaintiffs called Elon Musk, his brother (Tesla board member) Kimbal Musk, and three expert witnesses in their case-in-chief. Plaintiffs cross-examined Musk’s 13 fact and expert witnesses. At trial, Plaintiffs sought to prove that Musk breached his fiduciary duties to Tesla by proposing the Acquisition and pushing it through, while knowing that SolarCity was worth nowhere close to the $2.1 billion Tesla paid for it. Plaintiffs also sought to prove that Tesla stockholders who voted to approve the Acquisition were not given true information about Musk’s involvement in the Acquisition negotiations or SolarCity’s true financial condition, among other things. After hearing witness testimony, the Court adjourned the trial for post-trial briefing.
The parties conducted post-trial briefing between October 1, 2021 and December 17, 2021. Post-trial oral argument took place on January 18, 2022. On April 27, 2022, the Delaware Court of Chancery ruled for Elon Musk, holding that Musk did not breach his fiduciary duties and that the price paid by Tesla for SolarCity was fair. On May 27, 2022, Plaintiffs appealed this ruling to the Delaware Supreme Court.
Memorandum Opinion, dated April 27, 2022