The Delaware Court of Chancery ruled for Elon Musk and members of the Tesla board of directors on claims that they breached their fiduciary duties and engaged in other wrongdoing in connection with Tesla’s 2016 acquisition of the solar energy company SolarCity Corporation, which had liquidity issues. At the time, Musk was the chairman of the SolarCity board of directors and its largest stockholder. The court noted that Musk had authored and released a “Master Plan” in 2006 that declared that Tesla would “accelerate the world’s transition to sustainable energy,” and that SolarCity was “part of this vision” and “specifically mentioned in the Master Plan.” The judge concluded that Musk “was undoubtedly involved in the deal process in ways he should not have been, but fortunately, the Tesla Board ensured nevertheless that the process led to a fair price.” Among other things, the judge concluded that “synergies,” including creation of an “integrated sustainable energy company,” were “a strong rationale” for the acquisition. The court found that “there can be no doubt that the combination with SolarCity has allowed Tesla to become what it has for years told the market and its stockholders it strives to be—an agent of change that will ‘accelerate the world’s transition to sustainable energy’ by ‘help[ing] to expedite the move from a mine-and-burn hydrocarbon economy towards a solar electric economy.’” The court found no basis to conclude that a “fairer price” was available and therefore concluded that the price paid was “entirely fair,” which was not consistent with a breach of fiduciary duty.

Claims against proposed acquisition of SolarCity Corporation by Tesla Motors, Inc.


In re Tesla Motors, Inc. Stockholder Litigation

<p>This entry was provided by the Sabin Center for Climate Change Law. Please see the terms of use for citation and licensing of third party data.</p>

Chancery Court Rejected Claims of Breach of Fiduciary Duty in Tesla Acquisition of SolarCity

Filed

United States of America

Delaware

The Climate Litigation Database

Find climate change litigation data and indicators for {text}.

{text} litigation

Sabin Center for Climate Change Law provides Climate Litigation Database, a comprehensive database of US and Global climate change caselaw

Quickly and easily search through the complete text of thousands of climate change law and policy documents from every country.

Search the Climate Litigation Database

An aim to achieve a quantifiable outcome within a given time-frame, set by an institution such as a national government.

Policy instruments are techniques or tools used by governing authorities to promote certain policies in order to achieve predetermined goals. Put simply, instruments are how a government tries to achieve its goals, with this taxonomy being focused on national policy instruments.

Risk is the potential for adverse consequences resulting from the dynamic interplay between (climate-related) hazards, exposure, and vulnerability of affected human or ecological systems.

Groups  of people who are adversely affected by climate change or the response to it

A set of principles, processes, and practices that build economic and political power to shift from an extractive economy to a regenerative economy.

Justice is the ethical and political framework that addresses fairness, including issues of responsibility, rights, and structural inequity.

Renewable energy means all forms of energy produced from renewable sources in a sustainable manner.

Fossil fuel is a generic term for non-renewable energy sources such as coal, fossil gas, and oil (including crude oil, and petroleum products), that can be used for electricity and heat generation. Fossil fuels are hydrocarbons formed from pressurised and heated organic material buried over millions of years.

Molecules in the atmosphere that play a key role in the greenhouse effect by trapping heat radiating from Earth’s surface.

Area of the economy in which actors engage in identical or related activities.

In human systems, the process of adjustment to actual or expected climate change and its effects, in order to moderate harm, increase resilience or exploit beneficial opportunities. In natural systems, the process of adjustment to actual climate change and its effects; human intervention may facilitate adjustment to expected climate change and its effects.

The management and allocation of funds, assets and investments to meet various objectives

A tax advantage is a fiscal incentive where the government reduces or exempts selected activities, goods or actors from taxes.

A loan is a policy instrument where funds are provided to a borrower with the expectation of repaying the principal plus interest.

Financial support to help individuals manage the effects of unexpected events, securing their livelihoods and increasing the resilience of people and businesses to the changing climate. It’s especially vital in developing regions where everyday risks, climate-related weather extremes, or crop failures can push people into poverty. Without insurance, people may have to resort to selling assets or cutting consumption to cope with losses.

The processes through which enterprises can identify, prevent, mitigate and account for how they address their actual and potential adverse impacts. Due diligence is the idea that reasonable precautions should be taken to avoid causing harm to people, the environment, or society. It also involves identifying and mitigating risks before they occur.

Either money or something of monetary value is transferred between two or more organisations, people or countries.

Replacing technologies that burn fossil fuels directly with alternatives powered by electricity.

Actions to reduce emissions in energy generation and supply.

Technologies that capture and hold energy in reserve for later use.

Production of electricity and heat from solar irradiation.

Oil is a combustible liquid fossil fuel composed mainly of hydrocarbons, occurring as crude oil and refined into petroleum products such as petrol, diesel and kerosene.

Fossil gas, commonly known as natural gas, is a fossil fuel consisting chiefly of methane with smaller amounts of other hydrocarbons and trace gases, found in underground deposits.

Jobs that contribute to preserving or restoring the environment. We include jobs which require a high amount of green skills or which spend much of their time on green activities, as well as jobs transforming polluting industries.

woman and genders outside of the gender binary

Any compulsory, unrequited payment to the government levied on corporations or individuals. This can be for environmental reasons, such as introducing a Carbon tax to set a price that emitters must pay for the greenhouse gases they emit.

Activities of industries that extract natural resources, such as mining, oil, and gas, for commercial use.

The activities of industries that transforms raw materials into finished goods through industrial processes.

The activities of industries involved in the production, distribution, and sale of energy, including electricity, gas, and renewables.

Activities that involve planning, designing and building infrastructure, residential, and commercial structures.

This sector involves activities to move goods and people, alongside the storage of products.

Activities that provide lodging, food, and entertainment services to guests, including hotels, restaurants, and resorts.

This sector creates and distributes information and entertainment through television, radio, print, and digital platforms.

This sector involves activities that impart knowledge and skills to individuals, including formal schooling, vocational training and educational support.

This sector includes firms and individuals offering specialised expertise in fields such as law, accounting, consulting, science and engineering.

Activities of businesses and institutions that provide financial services and products to individuals and organisations.

Geohazards are adverse geological phenomenon's that are capable of causing widespread damage or loss to property, life and the environment, such as earthquakes, volcano eruptions and tsunamis. Climate change can increase the frequency and severity of some geohazards, such as landslides, and soil erosion.

Chancery Court Rejected Claims of Breach of Fiduciary Duty in Tesla Acquisition of SolarCity

Policy instrument

Risk

Impacted group

Just transition

Renewable energy

Fossil fuel

Economic sector

Finance