Twitter, Inc. v. Elon R. Musk

Opinion

COURT OF CHANCERY OF THE STATE OF DELAWARE KATHALEEN ST. JUDE MCCORMICK LEONARD L. WILLIAMS JUSTICE CENTER CHANCELLOR 500 N. KING STREET, SUITE 11400 WILMINGTON, DELAWARE 19801-3734

September 2, 2022

David J. Margules, Esquire Edward B. Micheletti, Esquire Elizabeth A. Sloan, Esquire Lauren N. Rosenello, Esquire Elizabeth S. Fenton, Esquire Skadden, Arps, Slate, Meagher & Flom LLP Jessica C. Watt, Esquire 920 N. King Street, 7th Floor Brittany M. Giusini, Esquire P.O. Box 636 Ballard Spahr LLP Wilmington, DE 19899-0636 919 N. Market Street. 11th Floor Wilmington, DE 19801 Richard I. G. Jones, Jr., Esquire Zachary J. Schnapp, Esquire Brad D. Sorrels, Esquire Berger Harris LLP Wilson Sonsini Goodrich & Rosati, P.C. 1105 N. Market Street, 11th Floor 222 Delaware Avenue, Suite 800 Wilmington, DE 19801 Wilmington, DE 19801

Re: Twitter, Inc. v. Elon R. Musk et al., C.A. No. 2022-0613-KSJM

Dear Counsel:

This letter decision resolves the August 25, 2022 joint motion of Craft Ventures

Management, LP and Sacks.com LLC to quash subpoenas directed to them and enter a

protective order (the “Motion to Quash”). I have carefully studied the Motion to Quash, 1

Twitter, Inc.’s August 29, 2022 Opposition to the Motion to Quash, 2 and the movants’

August 30, 2022 reply in further support of the Motion to Quash. 3

1 C.A. No. 2022-0613-KSJM, Docket (“Dkt.”) 251 (“Mot. to Quash”). 2 Dkt. 270 (“Opposition”). 3 Dkt. 299. C.A. No. 2022-0613-KSJM September 2, 2022 Page 2 of 5

I will keep this brief. I again assume that the readers are familiar with the

background of this action. David Sacks is one of four individuals identified by Elon Musk

as persons with whom he privately communicated about the Twitter transaction. Sacks’s

fund, Craft Ventures GP I, LLC (“Craft”), entered into a non-disclosure agreement with

Musk to evaluate a potential investment in connection with Musk’s acquisition of Twitter.

On August 1, 2022, Twitter served a California subpoena on Sacks.

What happened next was unusual. To quote from Twitter’s Opposition:

Sacks’ response was swift and obscene. That evening, he Tweeted a virtual middle-finger at “Twitter’s lawyers,” then a video of a man urinating on a subpoena while yelling expletives to a cheering crowd. 4

Sacks next complained about the subpoena on Bloomberg TV, stating that he has “never

been in possession of non-public information related to [Twitter’s] contract dispute with

Elon.” 5 A few days later, Sacks stated on a publicly aired podcast that Twitter’s subpoena

was inappropriate because Sacks was “not even involved” with the transaction and was

“not in possession of non-public information about this.” 6 He further stated that he would

respond to the subpoena by “hir[ing] a lawyer to go quash this thing.” 7

4 Opposition ¶ 1. 5 Opposition ¶ 10 (quoting David Sacks Calls Twitter Subpoena ‘Harassment,’ Bloomberg (Aug. 10, 2022), https://www.bloomberg.com/news/videos/2022-08-10/david-sacks-calls- twitter-subpoena-harassment-video). 6 All-In Podcast, E90: Twitter subpoenas, market overview, Pelosi's Taiwan visit & more, YouTube (Aug. 5, 2022), https://youtu.be/jlK5tsUuEP0. 7 Opposition ¶ 3 (quoting All-In Podcast, E90: Twitter subpoenas, market overview, Pelosi's Taiwan visit & more, YouTube (Aug. 5, 2022), https://youtu.be/jlK5tsUuEP0). C.A. No. 2022-0613-KSJM September 2, 2022 Page 3 of 5

Craft hired California counsel, who informed Twitter on August 10 that Sacks

expected to respond to the subpoena on August 17 and would “endeavor to produce

documents by the August 22, 2022 response date.” 8 Meanwhile, Twitter learned of the

Craft non-disclosure agreement and served a second California subpoena on Craft on

August 15. Sacks’ California counsel agreed to accept service.

Twitter’s counsel became concerned that Sacks would not comply with his

obligations. On August 22, Sacks’ supposed target date for document production, Twitter

served Delaware subpoenas on Sacks’s Delaware affiliates, which are the movants. Sacks

responded that the Delaware subpoenas were unduly burdensome because they were

duplicative of the California subpoenas and the return dates were too soon. To allay these

concerns, Twitter made clear that it would treat Sacks’s compliance with the California

subpoenas as full compliance with the Delaware subpoenas and that the return dates were

negotiable. Sacks’s California counsel proceeded to engage cooperatively with Twitter’s

counsel to satisfy the California subpoenas.

Then came the Motion to Quash. In it, the movants claim that they were

“cooperative” in California from the start. 9 They describe Sacks’s connection to the

transaction as “tenuous.” 10 They describe the Delaware subpoenas as wholly duplicative.

They complain that the Delaware subpoenas force them to incur the added expense of

8 Mot. to Quash ¶ 1. 9 Mot. to Quash ¶ 4. 10 Id. C.A. No. 2022-0613-KSJM September 2, 2022 Page 4 of 5

Delaware counsel. On these grounds, they have moved to quash, deny, and limit the

Delaware subpoenas pursuant to Court of Chancery Rules 45 and 26. They have also

requested fee-shifting.

Rule 45 requires a subpoenaing party to “take reasonable steps to avoid imposing

undue burden or expense on a person subject to that subpoena.” 11 The court protects non-

parties “from significant expense resulting from the inspection and copying

commanded.” 12 The court will “quash or modify the subpoena” in a number of

circumstance, including if the subpoena “[f]ails to allow reasonable time for compliance”

or “[s]ubjects a person to undue burden.” 13 Rule 26 empowers the court to deny or limit

discovery that is “unreasonably cumulative or duplicative” or “obtainable from some other

source that is more convenient, less burdensome, or less expensive.” 14 The movants bear

the burden of establishing that the Delaware subpoenas exceed Rules 45 or 26.

The movants have not met their burden here. The Delaware subpoenas were not

“unreasonably” duplicative. Twitter had valid concerns based on Sacks’s behavior that

neither he nor Craft would comply with the California subpoenas. Rather than burden a

judge in another state with a request to enforce a subpoena, or risk not getting relief in time

for use in this highly expedited matter, Twitter served the Delaware subpoenas as an

11 Ct. Ch. R. 45(c)(1). 12 Ct. Ch. R. 45(c)(2)(B). 13 Ct. Ch. R. 45(c)(3)(A). 14 Ct. Ch. R. 26(b)(1). C.A. No. 2022-0613-KSJM September 2, 2022 Page 5 of 5

insurance policy. In other circumstances, I might view entirely duplicative subpoenas

served for such tactical purposes as problematic. Where, as here, the subpoena recipient

Tweets the subpoenaing attorneys the middle finger and a video of someone urinating on

subpoenas, I am less bothered by it.

The Delaware subpoenas impose no undue burden. Twitter made clear that it would

treat compliance with the California subpoenas as full compliance with the Delaware

subpoenas and that the return dates were negotiable. The only burden identified by the

movants is the expense associated with hiring Delaware counsel. The movants did not

need to hire Delaware counsel to comply with the Delaware subpoenas. They only needed

Delaware counsel to move to quash the Delaware subpoenas. In an apparent effort to keep

Sacks’s promise to his podcast listeners, the movants created the very burden of which they

now complain.

The Motion to Quash is denied.

Sincerely,

/s/ Kathaleen St. Jude McCormick

Kathaleen St. Jude McCormick Chancellor

cc: All counsel of record (by File & ServeXpress)