DOVER, Del. A Delaware judge has approved a $ 60 million settlement in a lawsuit against shareholders challenging electric car maker Tesla Inc.’s $ 2 billion acquisition of installer SolarCity in SolarCity in 2016.
The judge approved the arrangement in a brief phone call her Monday. He also approved $ 16.8 million in legal fees and expenses claimed by the plaintiff’s attorneys. This amounts to about 28% of the “derivative deposits”, which were made on behalf of the company and will be financed by insurers.
The scheme resolves claims against executives who sat on Tesla’s board in 2016, but does not include CEO and co-founder Elon Musk. A trial with Musk as a lone suspect has been set for March 2021, after it was postponed this March due to the outbreak of the coronavirus.
The lawsuit alleges that Tesla’s directors shared their fiduciary duties to shareholders by bowing to Musk’s wishes and agreeing to buy the difficult solar energy business that Musk and his cousins co-founded. Musk was SolarCity’s largest shareholder at the time of the deal. Plaintiffs allege that the deal wrongfully benefited him, his cousins, and Tesla executives, who have stakes in SolarCity.
Lawyers for Tesla officials have noted that the deal was ratified by a majority of interested shareholders and argued that the court should postpone the business judgment of business leaders. The plaintiffs contend that Musk was a controlling and conflicting shareholder, and that the judge must therefore determine whether the deal complies with the Court of Justice’s ‘fairness’.
