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SAN FRANCISCO — Elon Musk did not breach his duty of loyalty to Tesla when the company acquired solar energy company SolarCity, a Delaware Chancery Court judge ruled Wednesday. The decision was made in a 132-page statement.
Judge Joseph R. Slights III wrote, in his opinion, “My judgment relates to the defense of all claims.”
Tesla acquired SolarCity in 2016 for $2.6 billion. Musk then owned a large portion of SolarCity, which was run by two of his cousins. Tesla shareholders have claimed that Musk made the purchase in his own interests and not those of the electric vehicle company, which is now the world’s most valuable automaker.
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Musk himself had taken a stand in the SolarCity suit last summer, defending Tesla’s decision to buy the solar company while laying out the deal in relation to the future of the planet.
The decision adds to a string of legal victories for Musk in high-profile lawsuits that posed risks for both him and Tesla. Musk, for example, was found not liable in the 2018 defamation lawsuit involving a Thai cave rescue driver he called a “pedo guy.” And though he resigned as Tesla chairman after a 2018 tweet that he had “secured funding” to privatize Tesla for $420 a share, Musk retained control of the company and went on to become the world’s richest person.
The latest threat to Tesla is Musk’s $44 billion deal this week to acquire social media company Twitter. He is using billions of dollars in his Tesla stake as collateral to pay for Twitter, a move that sent Tesla shares down more than $100 billion on Tuesday.
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In the SolarCity process, Musk would have had to pay Tesla back up to $2 billion.
Aside from that potential punishment, the lawsuit was also a referendum on Musk’s brazen leadership style — where he aggressively pursued his interests, sometimes outside of established processes.
Slights nodded to Musk’s unusual involvement in the deal on Wednesday, he says.
“The process used by Tesla’s board of directors to negotiate and ultimately recommend the acquisition was far from perfect. Elon was more involved in the process than a conflicted trustee should be,” he wrote. “With that in mind, the Tesla board of directors meaningfully reviewed the acquisition, and Elon has not stood in the way.”
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Slights also said Tesla paid a fair price for SolarCity in the deal.
“SolarCity was worth at least what Tesla paid for it,” he wrote, “and otherwise the acquisition was very beneficial for Tesla.”