Elon Musk subpoenas ex-Twitter CEO Jack Dorsey, Tesla loses racism case fight

Elon Musk on Twitter
The controversial billionaire is still trying to walk away from the $44 billion takeover. Photo credit: Getty Images

Billionaire entrepreneur Elon Musk is seeking documents from Twitter co-founder Jack Dorsey as the CEO of Tesla and SpaceX pursues his legal fight to walk away from his US$44 billion deal for the social media company, according to a court filing.

Dorsey, who resigned as Twitter's chief executive in November and left the board in May, was asked for documents and communications about Musk's April agreement to buy the company and about spam accounts on the platform, according to a copy of the subpoena.

Dorsey, who is CEO of payments processing company Block, did not immediately respond to a request for comment. Block was co-founded by Dorsey and changed its name last year from Square.

Musk, the world's richest person due to his stake in Tesla Inc , told Twitter in July he was ending the agreement to buy the company for US$54.20 per share because he alleged Twitter had violated the deal contract.

Twitter and Musk have since sued each other, with Twitter asking a judge on the Delaware Court of Chancery to order Musk to close the deal. A five-day trial is set to start on October 17.

The subpoena sought documents and communications about Twitter's use of mDAU, a measure of active users on its platform.

Musk has alleged the company defrauded him by hiding the number of fake accounts in its regulatory filings, which Musk said he used to value the company.

Twitter has denied Musk's spam allegations.

Musk also wanted documents and communications regarding alternative measures of active users that the company has considered and information about the use of mDAU in executive pay and annual targets.

Twitter declined to comment.

Dorsey had supported Musk's buyout offer for Twitter as the two men have agreed on the need for more transparency for its algorithm and allowing users more control over the content they see.

Dorsey has also tweeted that he believes Twitter is held back by the advertising model and Musk has said Twitter should rely more on subscription fees and services such as money transfers between users.

Musk and Dorsey held discussions in March about Musk joining the Twitter board before Musk revealed he had acquired a 9.1 percent stake in Twitter. Musk accepted a board seat but before he began his term, he changed course and offered to buy the company.

Shares of Twitter were down 2.5 percent at $42.89 in late Monday, US time, trade.


Meanwhile, a California administrative agency has declined to review Tesla's claim that the state's civil rights watchdog suing the company for race bias at an assembly plant is rushing to sue businesses without conducting full investigations.

California's Office of Administrative Law in a letter denied Tesla's petition, filed in June, to determine whether the Department of Civil Rights (DCR) had adopted "underground regulations" that flout requirements it must meet before suing employers.

The letter obtained by Reuters is dated August 8 but was received by the department last week.

The OAL, which reviews state agency regulations and can recommend changes, did not give a reason for the denial and said Tesla can still pursue its claims in court.

The department in a pending lawsuit filed in February says Tesla's flagship Fremont, California, plant was a racially segregated workplace where Black employees were harassed and discriminated against in terms of job assignments, discipline and pay. read more

A representative of Tesla, which has denied wrongdoing in the race bias case, had no immediate comment.

A spokesperson for the DCR did not immediately respond to a request for comment. The agency was called the Department of Fair Employment and Housing before changing its name last month.

Tesla's petition with the OAL was an attempt to rein in the department's authority to pursue discrimination cases by forcing it to take additional steps before suing, such as providing businesses with detailed explanations of alleged legal violations and making efforts to settle outside of court.

In the pending lawsuit, Tesla has argued that the DCR sued without first notifying the company of all of the claims or giving it a chance to settle.

A California state judge is scheduled to hold a hearing on Wednesday, US time, on Tesla's motion to dismiss the case.

The lawsuit is one of several pending in California courts that accuse Tesla of tolerating discrimination and sexual harassment at its factories.

A state judge in April cut a jury verdict for a Black worker who alleged racial harassment from US$137 million to US$15 million.

The worker, Owen Diaz, rejected the reduced award and opted for a new trial, which is scheduled for March 2023.