In a significant legal development, Elon Musk's social media company X has officially terminated its lawsuit against the prestigious law firm Wachtell, Lipton, Rosen & Katz. The legal battle centered around a massive $90 million fee the firm received for successfully preventing Musk from abandoning his $44 billion Twitter acquisition.
The Lawsuit Dismissal
X formally notified a California state court through a filing on Wednesday that it was dismissing the case with prejudice, meaning the company cannot refile the lawsuit in the future. The court document provided no explanation for the sudden dismissal of the case that was originally filed in 2023.
A spokesperson for Wachtell Lipton expressed satisfaction with the outcome, stating the firm is "pleased that X has dismissed its meritless lawsuit with prejudice." The spokesperson explicitly confirmed that there was no settlement between the parties, ending speculation about a potential financial agreement.
Background of the Legal Conflict
The dispute originated from Wachtell Lipton's representation of Twitter during the intense buyout battle with Elon Musk. Musk's lawsuit alleged that the law firm had received "an improper bonus payment in violation of its fiduciary and ethical obligations to its client."
Musk specifically claimed that Twitter executives, in the lead-up to the sale's completion, had "run up the tab" by authorizing tens of millions in payments to legal firms designated as "success" or "project" fees. The lawsuit sought to recover most of the $90 million fee paid to Wachtell Lipton.
Wachtell's Defense and Legal Proceedings
Wachtell Lipton, renowned for its Wall Street deal expertise, consistently denied any wrongdoing throughout the legal proceedings. The firm countered that Twitter's board had "determined and approved" the fee, which ultimately forced Musk to honor his merger agreement and secured "billions in value for Twitter's stockholders."
In earlier court filings, Wachtell emphasized its successful representation of Twitter, noting that "after three-and-a-half months of round-the-clock litigation, Wachtell Lipton achieved complete success" in ensuring the acquisition proceeded.
The legal landscape shifted when a judge ruled that the dispute must be resolved through private arbitration rather than public court proceedings. Both parties were scheduled to provide a progress update to the court at a hearing in early December before the unexpected dismissal.
This development marks the conclusion of one of the several legal controversies surrounding Musk's acquisition of Twitter, which he subsequently rebranded as X in 2022. The platform and its legal representatives have not commented on the reasons behind dismissing the lawsuit.
