ERon Musk suffered one of the largest legal losses in U.S. history this week when Tesla’s CEO was stripped of $56 billion in compensation in a lawsuit brought by an unlikely opponent: a former heavy metal drummer. Covered.
Richard Tornetta sued Musk in 2018, when Tornetta, a Pennsylvania resident, owned just nine Tesla shares. The case ultimately went to trial in late 2022, and on Tuesday, a judge sided with Tornetta, invalidating his massive pay deal as unfair to him and all of his Tesla shareholders.
Mr. Tornetta could not be reached for comment, and his lawyer declined to comment.
Before Mr. Tornetta’s lawsuit, Mr. Musk had won a series of lawsuits accusing him of defamation, breach of duty to shareholders and violations of securities laws.
Judging by his online presence, Mr. Tornetta appears to be more interested in creating audio equipment for car customization enthusiasts than pursuing corporate excesses and fraud.
He posts light-hearted videos about his gadgets and mishaps, such as explaining how he burned his eyebrows.
Tornetta also appears in a video playing drums at the former legendary New York club CBGB with his now-defunct metal band Dawn of Collection, describing the sound as “steel-toed.” “It sounded like a quick kick in the face with a work boot.”
On social media, fans of Tesla and Musk seem to feel the incident is a travesty of justice, speculating about Tornetta’s intentions and political affiliations and wondering how investors with such a minuscule stake could He questioned whether he could wield such power.
Delaware’s corporate case law is replete with cases naming individual investors with small stakes that ultimately shaped American corporate law.
Eric Talley, who teaches corporate law at Columbia Law School, said many law firms representing shareholders have a steady stream of investors who can work with them to litigate cases. They may be pension funds with a wide range of stocks, but they are also often individuals like Tornetta.
Talley said it’s common for plaintiffs to sign the paperwork to file a lawsuit and then walk away. Investors won’t pay law firms to take on cases on a contingency basis, as lawyers did in the Musk case.
Mr. Tornetta, like other Tesla shareholders, stands to benefit from winning the lawsuit, saving the company billions of dollars that subordinate boards paid to Mr. Musk.
Business groups have long criticized lawsuits brought by individuals as a sign of potential abuse. A decade ago, Delaware was beset by lawsuits contesting merger deals and led by private investors who owned a minority stake. Cases were often quickly resolved with nonsensical settlements, which always included payments to the lawyers who brought the cases. Delaware judges and lawmakers eventually curbed the practice.
Experts said people like Tornetta are essential to policing the boardroom. Lawmakers and judges have long wanted big investment firms to take the lead in these corporate cases because of their ability to monitor lawyers’ tactics. But experts said fund managers did not want to jeopardize their relationships on Wall Street.
Therefore, it was up to Tornetta to face Mask.
“His name is now etched in the history of corporate law,” Talley said. “My students will be reading ‘Tornetta vs. the Mask’ for the next 10 years.”
Source: www.theguardian.com
