The judge presiding over Twitter Inc.’s $44 billion lawsuit against Elon Musk has a reputation for being uncompromising and holds the distinction of being one of the few judges to have ever issued an order compelling a reluctant bidder to consummate a corporate merger in the United States.
Last year, Kathaleen McCormick became the first woman to serve as chancellor or head judge of the Court of Chancery. She was given the Twitter lawsuit on Wednesday, which is set to be one of the largest court battles in recent memory and aims to compel Musk to finish his acquisition of the social media network.
Adam Badawi, a law professor who specializes in corporate governance at the University of California Berkeley, said of the woman, “She already has a track record of not putting up with some of the worst behavior that we see in these areas when people want to get out of deals.” She is an authoritative, serious judge.
She is regarded as being soft-spoken, accessible, and affable — but also someone who stands her position — in contrast to Musk’s loud and turbulent demeanor. She promotes ethics at legal conferences and respect for one another among litigants.
She told a group of people at the University of Delaware this year, “We’ve always had each other’s backs, we’ve always gone out for drinks after arguments and kept this level civility.”
Musk announced on Friday that the $44 billion acquisition of Twitter, which was valued at $54.20 per share, had been terminated after weeks of combative tweets indicating Twitter was concealing the true number of false accounts. The social media site filed a lawsuit on Tuesday.
According to legal professionals and court records, judges have only a small number of instances ordered reluctant buyers to complete corporate purchases. McCormick was among them.
By directing an unit of private equity firm Kohlberg & Co LLC to complete its $550 million acquisition of cake decorating supplies manufacturer DecoPac Holding Inc, McCormick caught the eye of Wall Street dealmakers last year.
She dismissed Kohlberg’s claims that it would back out of the purchase due to a lack of funding and characterized her decision as “chalking up a victory for deal certainty.”
The Twitter agreement and the case have numerous similarities. Kohlberg claimed, like Musk, that it was leaving because DecoPac had broken the merger agreement. Kohlberg, like Musk, argued that DecoPac failed to maintain routine operations.
There are variations as well. Musk’s offer is far greater, involves a publicly traded target company in Twitter, and might have an impact on Tesla Inc., the maker of electric vehicles that provides Musk with the majority of his wealth.
She has sided with shareholders in prior disputes between them and management. She stopped The Williams Cos Inc., an energy business, from implementing a so-called poison pill anti-takeover tactic last year, claiming that it violated their fiduciary duty to shareholders.
She stated last month that Carvana Co. stockholders could bring a lawsuit against the board for selling stock directly to a small group of investors while the stock price was low during the early pandemic. McCormick, a Notre Dame Law School alumna, began her legal career as a court navigator for low-income clients with the Legal Aid Society of Delaware.
During her confirmation hearing, she told the Delaware Senate that she entered private practice “primarily for financial reasons” and joined Young Conaway Stargatt & Taylor, one of the state’s leading companies for business litigation.
She began working for the Court of Chancery in 2018 as a vice chancellor, and last year she was the first woman to hold that position. Despite her polite demeanor, Eric Talley, a corporate law expert at Columbia Law School, said he didn’t think McCormick would be intimidated by Musk.