David M. Wagner, v. Tesla, Inc., a Delaware corporation Document 1: Complaint, Attachment 1

Delaware Court of Chancery
Case No. 2021-1090-JTL
Filed December 16, 2021

Verified Complaint Pursuant to DEL. C. § 220 to Compel Inspection of Books and Records

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Page 1 EFiled: Dec 16 2021 12:39PM EST
Transaction ID Case No. 2021-1090-
EXHIBIT A
Page 2 Gustavo F. Bruckner
Partner
December 2, Via Overnight Courier
Board of Directors
Tesla, Inc.
c/o The Corporation Trust Company
1209 Orange Street
Wilmington, Delaware Re:
Demand to Inspect Books and Records Pursuant to 8 Del. C. § RESPONSE WITHIN FIVE BUSINESS DAYS REQUIRED
Dear Members of the Board of Directors of Tesla, Inc.:
This letter serves as a stockholder demand for inspection of books and records (the
“Demand”) pursuant to Delaware General Corporation Law, 8 Del. C. § 220 (“Section 220”).
Pomerantz LLP and Heyman Enerio Gattuso & Hirzel LLP represent David M. Wagner
(“Stockholder”), a stockholder of Tesla, Inc. (“Tesla” or the “Company”). The Stockholder
presently owns shares of Tesla common stock and has held such stock at all relevant times. A true
and correct copy of the Stockholder’s open holdings statement demonstrating Stockholder’s
ownership of Tesla stock is attached hereto as Exhibit A. The Stockholder has appointed the
undersigned to act on Stockholder’s behalf in connection with this Demand by the Special Power
of Attorney attached hereto as Exhibit B. Also enclosed as Exhibit C is a verification on behalf
of the Stockholder confirming that the statements in this letter are true and correct to the best of
Stockholder’s knowledge, information, and belief.
I.
Facts Giving Rise to The Demand
This Demand arises out of the circumstances surrounding recent social media posts by Elon
Musk (“Musk”), Tesla’s founder and chief executive officer, which impacted the Company’s stock
price and may have violated certain agreements with the U.S. Securities and Exchange
Commission (the “SEC”) and applicable law. Most recently, on November 6, 2021, Musk posted
a poll to his twitter account and wrote: “Much is made lately of unrealized gains being a means of
tax avoidance, so I propose selling 10% of my Tesla stock. Do you support this?” 1 Musk gave
https://twitter.com/elonmusk/status/1457064697782489088.
gfbruckner@pomlaw.com
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Page 3 people the option to vote “Yes” or “No”. Some 3,519,252 twitter users responded, and 57.9% of
them voted for “Yes.”2 In a subsequent post that same day, Musk wrote “I will abide by the results
of this poll, whichever way it goes.” In the first day of trading following Musk’s tweets, shares of Tesla declined 4.8% on
November 5, 2021, to close at $1,162.94 per share. Shares of Tesla dropped an additional 12% on
November 6, 2021, to close at $1,023.50 per share. Thus, the information contained in Musk’s
tweets was plainly material to the Company and its stockholders and had a significant impact on
the Company’s stock price. Following the twitter poll, Musk sold 9.2 million shares and collected
roughly $9.9 billion in proceeds. The November 2021 tweets by Musk are the latest in a series of tweets that moved the
Company’s stock price. By way of example, on August 7, 2018, Musk falsely tweeted “[a]m
considering taking Tesla private at $420. Funding secured.” 5 In truth, Musk did not have funding
Id.
https://twitter.com/elonmusk/status/1457066048944066565.
See:
https://www.sec.gov/Archives/edgar/data/1318605/000089924321045944/xslF345X03/doc4.xml
https://www.sec.gov/Archives/edgar/data/1318605/000089924321045946/xslF345X03/doc4.xml
https://www.sec.gov/Archives/edgar/data/1318605/000089924321045947/xslF345X03/doc4.xml
https://www.sec.gov/Archives/edgar/data/1318605/000089924321045949/xslF345X03/doc4.xml
https://www.sec.gov/Archives/edgar/data/1318605/000089924321044921/xslF345X03/doc4.xml
https://www.sec.gov/Archives/edgar/data/1318605/000089924321044924/xslF345X03/doc4.xml
https://www.sec.gov/Archives/edgar/data/1318605/000089924321044689/xslF345X03/doc4.xml
https://www.sec.gov/Archives/edgar/data/1318605/000089924321044687/xslF345X03/doc4.xml
https://www.sec.gov/Archives/edgar/data/1318605/000089924321044475/xslF345X03/doc4.xml
https://www.sec.gov/Archives/edgar/data/1318605/000089924321044261/xslF345X03/doc4.xml
https://www.sec.gov/Archives/edgar/data/1318605/000089924321044262/xslF345X03/doc4.xml
https://www.sec.gov/Archives/edgar/data/1318605/000089924321044241/xslF345X03/doc4.xml
https://www.sec.gov/Archives/edgar/data/1318605/000089924321044242/xslF345X03/doc4.xml
https://www.sec.gov/Archives/edgar/data/1318605/000089924321044232/xslF345X03/doc4.xml
https://www.sec.gov/Archives/edgar/data/1318605/000089924321044244/xslF345X03/doc4.xml
https://www.sec.gov/Archives/edgar/data/1318605/000089924321044240/xslF345X03/doc4.xml
https://www.sec.gov/Archives/edgar/data/1318605/000089924321044229/xslF345X03/doc4.xml
https://www.sec.gov/Archives/edgar/data/1318605/000089924321044235/xslF345X03/doc4.xml
https://www.sec.gov/Archives/edgar/data/1318605/000089924321044225/xslF345X03/doc4.xml
https://www.sec.gov/Archives/edgar/data/1318605/000089924321044077/xslF345X03/doc4.xml
https://www.sec.gov/Archives/edgar/data/1318605/000089924321044060/xslF345X03/doc4.xml
https://twitter.com/elonmusk/status/1026872652290379776.
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Page 4 in place. Nonetheless, following Musk’s false tweet, Tesla shares swiftly increased from roughly
$340 per share to almost $390 per share before settling at roughly $380 per share. It should come
as no surprise that investors took note of Musk’s social media posts. In November 2013, Tesla
formally notified investors that it would use Musk’s Twitter account as a formal means of
communication to convey “additional information” about the Company to investors. As a result of the false August 2018 tweet by Musk, the SEC filed a complaint against
Musk on September 27, 2018, alleging that Musk violated the federal securities laws. See SEC v.
Musk, No. 1:18-cv-8865-AJN-GWG (S.D.N.Y.). On September 29, 2018, the SEC and Musk
reached a settlement agreement that was submitted to the Court for its approval. On the same day,
the SEC filed a settled complaint against Tesla alleging a violation of the federal securities laws.
On October 16, 2018, the Court entered final judgments against both Musk and Tesla (the “Final
Judgments”). The Final Judgment as to Musk ordered him to comply with procedures implemented by
Tesla that would require him to seek pre-approval of any written communications that contained or
reasonably could contain information material to the Company or its stockholders. Similarly, the Final
Judgment as to Tesla ordered the Company to implement mandatory procedures and controls to preapprove any written communications by Musk that contained, or reasonably could contain, information
material to the Company or its stockholders. In addition, Musk was removed as Tesla’s chairman,
Musk was forced to pay a $20 million fine, Tesla was forced to pay a $20 million fine and the
Company agreed to appoint two new independent directors to the Company’s board of directors
(the “Board”).7 However, it is unclear whether the Company lived up to its obligations under the settlement with the SEC to monitor Musk’s social media posts. Indeed, in an interview with Minutes that aired in December 2018, Musk stated that no one reviewed his tweets before he
published them.Moreover, the SEC announced that on February 25, 2019, it filed a motion for an order to
show cause why Musk should not be held in contempt for violating the terms of the Final
Judgments which required, among other things, Musk to obtain pre-approval of any written
communications that contain, or reasonably could contain, information material to Tesla or its
stockholders.10 In order to resolve these allegations, the parties entered into a consent motion (the
“Consent Motion”) in April 2019 to amend the Final Judgments. Among other things, the Consent
https://www.latimes.com/business/story/2020-04-15/tesla-musk-funding-secured-trial.
https://www.sec.gov/divisions/enforce/claims/docs/musk-final-judgment-10162018.pdf.
https://www.sec.gov/divisions/enforce/claims/docs/tesla-final-judgment-10162018.pdf.
https://www.theverge.com/2018/12/9/18133591/elon-musk-tesla-ceo-60-minutes-interviewtwitter.
https://www.sec.gov/litigation/litreleases/2019/lr24413.htm.
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Page 5 Motion provides more specificity regarding certain categories of social media posts by Musk that
must be screened and approved in advance, including tweets about “events regarding the
Company’s securities (including Musk’s acquisition or disposition of the Company’s
securities).”To date, it is unclear who at Tesla, if anyone, is currently reviewing Musk’s tweets. The
last-named general counsel at Tesla was Jonathan Chang, who left the Company in December
2019. Acting General Counsel Al Prescott departed Tesla in April 2021. Matthew Yun Huh was
listed as Tesla’s designated disclosure counsel in May 2020 correspondence when the SEC
inquired about a Musk tweet dated May 1, 2020 that said “Tesla stock price is too high imo.” That same day Tesla’s stock price closed 10% lower than the day before following Musk’s Twitter
post. The SEC asked Tesla whether that tweet had been reviewed or pre-approved; Tesla responded
that it had not, and that the Company considered it to be an amorphous personal opinion. Matthew
Yun Huh no longer works at Tesla, according to Bloomberg.The Stockholder seeks to investigate this potential mismanagement and breaches of
fiduciary duty by Tesla’s Board and senior officers which led to the potential violations of
agreements with the SEC and apparent manipulation of the Company’s stock price by Musk.
These facts form a proper basis for the Stockholder’s request. The information sought pursuant to
this Demand will provide the Stockholder with the necessary information to determine whether
wrongdoing or mismanagement has taken place such that it would be appropriate to file a breach
of fiduciary duty action against the Board (and any officers who may have breached their fiduciary
duties), and/or aiding and abetting claims against any other party to recover damages suffered by
Tesla. Stockholder also seeks to determine whether or not to make a litigation demand on the
Board.
II.
Books and Records Requested
Pursuant to Section 220, Stockholder hereby demands, under oath, the right (by
Stockholder’s attorneys, consultants, or other agents), during the usual hours of business, to inspect
and make copies of the books and records of the Company described below. Unless otherwise
indicated, this Demand pertains to books and records from January 1, 2018 through the date of
production.
1.
Identification of all e-mail addresses of the individual Board members use(d) to
conduct Company business;

https://assets.bwbx.io/documents/users/iqjWHBFdfxIU/rN3rAsRzva0k/v0.
https://twitter.com/elonmusk/status/1256239815256797184.
https://www.bloomberglaw.com/bloomberglawnews/securities-law/X1FV6K1G000000.
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Page 6 2.
Documents sufficient to identify the individual or individuals tasked by Tesla with
reviewing or pre-approving social media posts by Musk;
3.
Documents sufficient to identify whether posts made to Musk’s Twitter account on
November 6, 2021 were reviewed or pre-approved in advance;
4.
Board Materials14 and Senior Management Materials15 relating to or reflecting:
a.
The Final Judgments;
b.
The Consent Motion;
c.
Posts made to Musk’s Twitter account on November 6, 2021;
d.
Twitter and other social media posts by Musk related to the Company and/or
its share price; and
e.
Policies and procedures relating to the review or pre-approval of Twitter or
other social media posts by Musk;
5.
All documents produced to any other stockholder or their counsel in response to a
books and records demand relating to the subject matter of this Demand;
6.
All policies, procedures, handbooks, instruction or training manuals, white papers,
policy statements, or other guides relating to new Board member training or other

The term “Board Materials” means all documents, regardless of whether they are in hard copy
or electronic form, that were prepared, provided, disseminated, or discussed in connection with, in
anticipation of, or as a result of any meeting of the Board or any regular or specially created
committee thereof (including, without limitation, all meeting minutes, agendas, transcripts, notes,
summaries, presentations, Board packages, recordings, memoranda, charts, drafts of meeting
minutes where final forms do not exist, exhibits distributed at meetings, or Board resolutions).
This term also includes electronic communications — including, without limitation, emails, text
messages, or other digital communications — sent to, received by, or copied to any member of the
Board in connection with the subjects discussed in this letter.
The term “Senior Management Materials” means all documents and communications, regardless
of whether they were provided to any member of the Board, provided to, considered by, discussed
by, created by, and/or sent to or by any named executive officer of the Company — including via
emails, text messages, or other digital communication methods such as instant messaging
platforms.
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Page 7 onboarding procedures, including any minutes, notes, presentations, or other
documents distributed to any new Board member for the purposes of same; and
7.
III.
The following documents related to the independence of the Board:
a.
The most recent director independence questionnaire(s) for each current
member of the Board;
b.
Any questionnaire(s) completed by a current member of the Board in
connection with the purchase or renewal of any director and officer liability
insurance policy;
c.
Any questionnaire(s) concerning transactions in Tesla securities completed
by a current member of the Board;
d.
Documents concerning any evaluation of the independence of the Board
members reviewed by the Board and/or any of its committees; and
e.
Documents provided by the Board and/or any of its committees to a stock
exchange concerning the independence of any current member of the Board.
Stockholder Has a Proper Purpose for Making This Demand:
Investigate Potential Wrongdoing and Breaches of Fiduciary Duties at Tesla
The Stockholder has serious concerns about the conduct of management as described
above. To that end, this Demand is made in good faith and with a proper purpose as it is to enable
the Stockholder to: (1) investigate possible wrongdoing, mismanagement, and/or potential
breaches of fiduciary duties owed to the Company and its stockholders by its current and/or former
officers and directors; (2) obtain information to determine if the Company’s current and/or former
officers and directors have acted in compliance with their fiduciary duties; and (3) determine
whether to initiate stockholder derivative litigation and/or make a litigation demand on the Board
or seek other appropriate relief.
The aforementioned conduct and facts support a credible basis for potential wrongdoing or
mismanagement by the Company and its Board. See Pettry v. Gilead Scis., Inc., 2020 Del. Ch.
LEXIS 347 (Del. Ch. Nov. 24, 2020) (holding plaintiffs entitled to multiple categories of
documents to investigate wrongdoing from a company that was facing multiple different lawsuits
and regulatory actions). Additionally, the information sought regarding policies and procedures
of the Company, non-formal Board materials, is necessary to investigate the wrongdoing. Id. at
*51. (“But the formal board materials may not reflect what, if any, policies and procedures were
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Page 8 in place during that time period. These documents are therefore necessary and essential to
Plaintiffs' proper purposes. They are unlikely to be available from another source. Accordingly,
Plaintiffs are entitled to inspect this category of documents.”). (emphasis added). Director
questionnaires as well are necessary to understand whether the Board has any potential conflicts
or improper motives. Id. at *56 (“Because that the Demands investigate alleged violations of
positive law and government regulations, understanding the directors’ motives and potential
conflicts is paramount.”).
IV.
Conclusion
For purposes of the foregoing Demand, the Stockholder requests that the Company provide
or otherwise make available all such information up to the date in which the Company actually
and fully complies with the Demand and requests herein. The Stockholder further requests that
the Company provide or otherwise make available all additions, changes, and corrections to any
of the requested information from the time of this Demand to the time of any written confirmation
that this inspection has concluded. The Stockholder agrees to enter into a reasonable and
customary confidentiality agreement concerning the use of all documents produced by the
Company pursuant to this Demand.
Finally, the Stockholder requests that the materials identified above be made available as
soon as possible. Section 220 requires the Company respond to this Demand within five (5)
business days from the date of receipt. Please feel free to contact us as promptly as practicable
within the requisite timeframe to advise when and where the items requested above will be made
available for inspection. Should the Company believe this Demand is deficient or otherwise
refuses to comply, the Stockholder shall promptly file a complaint in the appropriate jurisdiction.
See Pettry, 2020 Del. Ch. LEXIS 347, at *5-6 (“Regrettably, Gilead’s overly aggressive defense
strategy epitomizes a trend. As described recently by a group of scholars, defendants are
increasingly treating Section 220 actions as ‘surrogate proceeding[s] to litigate the possible merits
of the suit’ and ‘place obstacles in the plaintiffs’ way to obstruct them from employing it as a quick
and easy pre-filing discovery tool.’ Defendants like Gilead adopt this strategy with the apparent
belief that there is no real downside to doing so, ignoring that this court has the power to shift fees
as a tool to deter abusive litigation tactics. Gilead’s approach might call for fee shifting in this
case, and the plaintiffs are granted leave to move for their expenses, including attorneys’ fees,
incurred in connection with their efforts to obtain books and records.”).
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Page 9 The Stockholder reserves the right to withdraw or modify this Demand at any time.
Very truly yours,
Gustavo F. Bruckner
Pomerantz LLP
and
Kurt M. Heyman
Heyman Enerio Gattuso & Hirzel LLP
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Page 10 EXHIBIT A
Page 11 ACCOUNT NUMBER
PAGE 3 OF
REDACTED 18 RR NMA
O
U
N
T
October 1, 2021 - October 31,
A
C
C
DAVID M WAGNER
L
PORTFOLIO SUMMARY (CONTINUED)
REDACTED
I
N
D
I
V
I
D
U
A
DESCRIPTION
SYMBOL/
CUSIP
ACCOUNT
TYPE
TSLA
M
QUANTITY
PRICE
MARKET
VALUE
LAST PERIOD'S
MARKET VALUE
% CHANGE
1,114.
122.
85.
EST. ANNUAL
INCOME
% OF TOTAL
PORTFOLIO
E Q UI T I E S / OP T I O N S (continued)
TESLA INC
COMMON STOCK
REDACTED
Total Equities
Total Cash (Net Portfolio Balance)
TOTAL PRICED PORTFOLIO
0.
11.
REDACTED
Page 12 EXHIBIT B
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