Elon Musk ‘is in a difficult position’ trying to delay trial deposition, former prosecutor says

Former Federal Prosecutor Renato Mariotti assesses Elon Musk's position in the ongoing lawsuit with Twitter, the billionaire's request to postpone his trial deposition, and the complications over signing away due diligence.

Video Transcript

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RACHELLE AKUFFO: Elon Musk and Twitter CEO Parag Agrawal are both reportedly seeking to reschedule their depositions in that lawsuit over Musk's $44 billion buyout. Well, former federal prosecutor Renato Mariotti joins us with more on this. So what do we know about the reasons someone would typically do this at this stage of a case?

RENATO MARIOTTI: Well, I think there's no question that Mr. Musk is not eager to get deposed. He wants to delay as long as possible until he gets more information, more discovery from the other side because the more discovery he has, the more he can tailor his testimony to the discovery that they see and hear. I do think it does look a lot like Mr. Musk is trying to get out of the sale because, frankly, the market turned against him. And as a result, he's really looking to find any evidence he can to try to give himself some leverage in negotiations with Twitter.

RACHELLE AKUFFO: And we know that-- there are a number of subpoenas have been issued for depositions, including for Larry Ellison, Jack Dorsey, of course. What-- do we have any sort of the fruits of some of these depositions that have come out so far?

RENATO MARIOTTI: Yeah, I think right now, I think what we've seen so far publicly, at the very least, is that Twitter actually did provide a lot of data to Mr. Musk, which is a problem for him because he's claiming, of course, that there was a lack of information provided to him. He's also making a claim based on a bot website that a very high percentage of Twitter users are bots. Unfortunately for Mr. Musk, even the owner of that site indicates that their data, that their analysis is not exactly accurate, something that couldn't be relied upon.

Mr. Musk is also, I think, relying a lot on some claims that were made by Twitter in an SEC filing which, of course, are heavily caveated. So I think, thus far, a lot of the testimony is as you would expect. And the question I think remains is whether or not there's going to be specific performance ordered by the court which would force Mr. Musk to purchase Twitter, even though, at this point, he doesn't want to do so.

RACHELLE AKUFFO: Now, we know that Elon Musk did waive due diligence. How much of what is happening outside of that, though, is perhaps covered? Like, does due diligence essentially rule out the fact-- rule out whether or not Musk will succeed in this case?

RENATO MARIOTTI: It really makes it an uphill battle for Mr. Musk. Waiving due diligence is something I would not ordinarily counsel a client to do. And when you do that, it's really hard after the fact to make claims after you signed an agreement to purchase to say there's more information I need, even though I waive due diligence, and I'm going to try to kill the deal over that. Very, very difficult claim, one that I don't think most lawyers would like to be making.

RACHELLE AKUFFO: So in terms of the path forward here in terms of success on Twitter's side or success on Elon Musk's side, what sort of options do they have ahead of them?

RENATO MARIOTTI: I really believe that both sides are going to ultimately settle this case. It's just going to take some time. You know, Elon Musk has every incentive to try to fight. He has every incentive to try to delay, which is maybe why we saw this recent news that he's trying to delay his deposition because the longer he delays, the more he can convince Twitter that this is a sideshow. It's distracting its company. It's potentially not allowing them to move on towards other potential goals that they have.

On Twitter's side, Twitter's doing what you would expect a company to do when it has shareholders that have consummated a deal to make a lot of money over their current share price. So, you know, Twitter is trying to swiftly bring this to consummate the deal and require specific performance. Musk is trying to drag it out. I think, eventually, there's going to be a settlement here.

RACHELLE AKUFFO: And we know that, of course, we had the Twitter whistleblower in front of-- going in front of lawmakers. How much did that shift the needle? And what, if anything, could shift the needle going forward in this case?

RENATO MARIOTTI: I do think it did shift the needle just because up until then, really, everything was going Twitter's way here. I think it did give Mr. Musk something to grab on to. I think, in his mind, he decided at a certain point he didn't want to by Twitter. And his lawyers are trying to search for some misrepresentation that Twitter made that they can hook on to.

I think the whistleblower did help. But I think going forward, there is-- I still think Musk is in a difficult position, ultimately. There's a reason why Musk wants to delay, obviously partly because it gives him more leverage. But I think also there's a hope that another whistleblower will come forward or something else will come out. The more he has to work with before he locks himself in to what his reasons are for not wanting to consummate the purchase, the better.

RACHELLE AKUFFO: So between now and the October court date, what are you keeping an eye on?

RENATO MARIOTTI: Sure. Well, I think I'm really keeping an eye on Mr. Musk's Twitter feed. It's not a-- it's not a coincidence that Mr. Musk had his own tweets referenced in the filing from Twitter. There's no question that he has done things that most litigants wouldn't do, so I'm always interested to see what admissions he's going to make, what statements he's going to make, definitely his much-- much-- must-read Twitter, so to speak. So I will be keeping an eye on that.

But I'm also going to really see and keep an eye on what-- who is deposed, what revelations do get publicly told about what is coming out of those depositions. And I think-- I'm also going to be interested to see whether or not, for example, Twitter-- you know, Twitter makes any filings publicly that are going to say anything relevant to the facts that ultimately are in dispute here related to the bot issue.

RACHELLE AKUFFO: We know all this drama is certainly not helping Twitter's share price, at least. A big thank you. Former federal prosecutor Renato Mariotti, thank you for your time this afternoon.