Description: Claims against proposed acquisition of SolarCity Corporation by Tesla Motors, Inc.
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In re Tesla Motors, Inc. Stockholder Litigation
Case Documents:
Filing Date Type File Action Taken Summary 04/27/2022 Memorandum Opinion Download Verdict for the defense. Chancery Court Rejected Claims of Breach of Fiduciary Duty in Tesla Acquisition of SolarCity. The Delaware Court of Chancery ruled for Elon Musk and members of the Tesla board of directors on claims that they breached their fiduciary duties and engaged in other wrongdoing in connection with Tesla’s 2016 acquisition of the solar energy company SolarCity Corporation, which had liquidity issues. At the time, Musk was the chairman of the SolarCity board of directors and its largest stockholder. The court noted that Musk had authored and released a “Master Plan” in 2006 that declared that Tesla would “accelerate the world’s transition to sustainable energy,” and that SolarCity was “part of this vision” and “specifically mentioned in the Master Plan.” The judge concluded that Musk “was undoubtedly involved in the deal process in ways he should not have been, but fortunately, the Tesla Board ensured nevertheless that the process led to a fair price.” Among other things, the judge concluded that “synergies,” including creation of an “integrated sustainable energy company,” were “a strong rationale” for the acquisition. The court found that “there can be no doubt that the combination with SolarCity has allowed Tesla to become what it has for years told the market and its stockholders it strives to be—an agent of change that will ‘accelerate the world’s transition to sustainable energy’ by ‘help[ing] to expedite the move from a mine-and-burn hydrocarbon economy towards a solar electric economy.’” The court found no basis to conclude that a “fairer price” was available and therefore concluded that the price paid was “entirely fair,” which was not consistent with a breach of fiduciary duty. 02/04/2020 Memorandum Opinion Download Plaintiffs' partial motion for summary judgment denied and defendants' motion for summary judgment granted in part and denied in part. 04/18/2019 Stipulation Download Court approved stipulated order of class certification. 03/16/2017 Complaint Download Second amended verified class action and derivative complaint filed. After the cases challenging Tesla's acquisition of SolarCity were consolidated, an amended complaint, and then a second amended complaint, were filed. The operative complaint no longer contained allegations regarding the acquisition's purported role in company founder Elon Musk's efforts to combat climate change, including the allegations from at least one original complaint that Tesla’s proposed acquisition of SolarCity—a company that the complaint alleged was started “to support Musk’s quest to fix climate change”— was driven by Musk’s desire to “ensure his legacy to change the world” by shifting to a solar electric economy. -
Prasinos v. Musk
Case Documents:
Filing Date Type File Action Taken Summary 10/19/2016 Order Download Actions consolidated. On October 19, 2016, seven lawsuits challenging Tesla's acquisition were consolidated. 09/06/2016 Complaint Download Stockholder derivative complaint filed. Tesla Shareholder Filed Suit Challenging Proposed Acquisition of SolarCity, Said Founder’s Desire to Change the World by Combatting Climate Change Was at Odds with Company’s Interests. A Tesla Motors, Inc. (Tesla) stockholder filed a stockholder derivative complaint asserting that Tesla’s proposed acquisition of SolarCity Corporation (SolarCity) would cause substantial damage to Tesla. Tesla is in the energy storage and electric car business. SolarCity describes itself as “America's #1 full-service solar provider.” The defendants were Tesla co-founder, chairman, and chief executive officer Elon Musk; other Tesla board members; SolarCity, for which Musk is chairman and the largest stockholder; other SolarCity directors and officers; and a Tesla subsidiary created for the purpose of acquiring SolarCity. The complaint, filed in the Delaware Court of Chancery, stated claims of breach of fiduciary duty, waste, and unjust enrichment. It is one of at least four complaints filed in the court in connection with the SolarCity acquisition. The complaint asserted that Tesla’s proposed acquisition of SolarCity—a company that the complaint alleged was started “to support Musk’s quest to fix climate change”— was driven by Musk’s desire to “ensure his legacy to change the world” by shifting to a solar electric economy. The complaint alleged that the acquisition was intended to protect Musk and his family’s and friends’ financial interests, and that the acquisition would not be in the best interests of Tesla and its shareholders.