Elon Musk braces for another court battle

WILMINGTON, Del: Elon Musk has taken on Detroit's automakers, short-sellers and securities regulators. Next week, the Tesla chief executive is set to square off in court against an unlikely foe - a thrash metal drummer who hopes to strip Musk of his $56 billion pay.

The trial will pit the world's richest person against one of the electric carmaker's smallest investors, Richard Tornetta, who held just nine shares when he sued in 2018.

Tornetta sued Musk and the Tesla board on behalf of the company in what is known as a shareholder derivative lawsuit. If successful, Musk's 2018 package of stock grants will be rescinded, benefiting Tesla. Tornetta is not seeking damages for himself.

Historically, cases brought by investors with a near-meaningless economic stake in the litigation have been criticized by business groups as "nuisance suits." Such lawsuits often end quickly in a non-monetary settlement and a payment to the attorneys representing the plaintiff.

"This case looks different," said Jessica Erickson, a professor at University of Richmond School of Law who has specialized in shareholder litigation.

Tornetta's case survived a motion to dismiss in 2019 and is heading to a week-long trial beginning on Monday in Wilmington, Delaware that will feature live testimony from Musk, who last month bought Twitter for $44 billion.

The pay package was widely criticized and California's teachers retirement system known as CalSTRS was among the investors who voted against it.

Legal experts said such large shareholders are unlikely to sue because it might invite blowback from Musk and cut off access to management. (Reuters)