September 15, 2023
A recent Law 360 story by Lauren Berg, “Musk’s X Corp. Slams Ex-Twitter Exec’s ‘Egregious’ Fee Bid”, reports that Elon Musk's social media company X Corp. urged the Delaware Chancery Court to reject three former top Twitter executives' bid seeking reimbursement for more than $1 million in legal fees, arguing that former Chief Legal Officer Vijaya Gadde's demand, in particular, is "egregious and unreasonable."
X Corp. claims it has already paid Gadde's counsel more than $106,000 for fees related to her appearance before the House Committee on Oversight and Reform during its investigation into the influence of social media on U.S. elections, which was in line with fees paid to counsel for other testifying Twitter executives, according to the company's brief unsealed opposing the summary judgment bid brought by Gadde, former Twitter CEO Parag Agrawal and former Chief Financial Officer Ned Segal.
But Gadde is demanding an "egregious and unreasonable" $1.15 million in fees without establishing what the facts are for determining reasonableness, such as the nature of her attorneys' work and the time spent on it, according to the opposition. "Gadde's submission hides those facts from the court's review through invoices that aggregate vague time descriptions in undifferentiated, block-billed time entries," X Corp. said.
"The court is thus obstructed from assessing, for example only, whether the time spent 'evaluating public materials' (even the partner-in-charge could not explain what it meant) was reasonable, given there is no way of knowing how much of the time-keeper's 150-plus hours was devoted to it." X Corp. said it doesn't dispute that Gadde is entitled to advancement of fees related to the inquiry, only that it disputes the reasonableness of her asserted fees.
Gadde, Agrawal and Segal sued the social media giant in April, saying they incurred significant expenses after becoming involved in several legal proceedings because of their former roles as Twitter executives. They contend that per company bylaws and indemnification agreements, X Corp., as Twitter's successor, is obligated to advance their legal expenses. Musk fired the three when he took ownership and control of the business in October 2022. Indemnification agreements covering them, however, remain in effect for proceedings related to their former position as officers, the complaint said.
In a motion for immediate payment in July, the trio argued: "Put simply, the world's richest person does not pay his bills." And in their motion for summary judgment earlier this summer, the former executives accused the company of "perpetually making excuses" for not meeting its obligations and that it is "gaining a well-earned reputation for shirking its commitments."
They said the social media giant had advanced them roughly $575,000 for their legal costs, but is still "wrongfully" withholding about $1.1 million owed, along with roughly $270,000 in interest and "fees-on-fees" for having to litigate the Chancery suit. But in its own motion for summary judgment, X Corp. called into question the reasonableness of fees related to Gadde's appearance in the Congressional inquiry, asking the court to reduce any advancement award to her from $1.15 million to $106,203.
In its opposition brief, the company reiterated those arguments, saying Gadde is asking the court to "rubberstamp her facially unreasonable Congressional inquiry fees simply because her counsel filed affidavits stating that, in their opinion, their fees are reasonable." X Corp. said Gadde is seeking fees amounting to 1,100% of those incurred by two other Twitter executives who testified at the hearing. There are issues of fact regarding the reasonableness of Gadde's fees that preclude summary judgment in her favor for advancement of fees that exceed $106,203, the opposition states.