Prasinos v. Musk

A Tesla Motors, Inc. (Tesla) stockholder filed a stockholder derivative complaint asserting that Tesla’s proposed acquisition of SolarCity Corporation (SolarCity) would cause substantial damage to Tesla. Tesla is in the energy storage and electric car business. SolarCity describes itself as “America's #1 full-service solar provider.” The defendants were Tesla co-founder, chairman, and chief executive officer Elon Musk; other Tesla board members; SolarCity, for which Musk is chairman and the largest stockholder; other SolarCity directors and officers; and a Tesla subsidiary created for the purpose of acquiring SolarCity. The complaint, filed in the Delaware Court of Chancery, stated claims of breach of fiduciary duty, waste, and unjust enrichment. It is one of at least four complaints filed in the court in connection with the SolarCity acquisition. The complaint asserted that Tesla’s proposed acquisition of SolarCity—a company that the complaint alleged was started “to support Musk’s quest to fix climate change”— was driven by Musk’s desire to “ensure his legacy to change the world” by shifting to a solar electric economy. The complaint alleged that the acquisition was intended to protect Musk and his family’s and friends’ financial interests, and that the acquisition would not be in the best interests of Tesla and its shareholders.