TWTR - Twitter rises in late trading after hearing in Musk case (updated)

A key Delaware hearing has begun Tuesday afternoon in the case of Twitter ( NYSE: TWTR ) v. Musk et al., with no fewer than eight legal issues on the table ahead of a trial that's now less than three weeks away that will establish what happens with Elon Musk's soured $44B deal to buy the company.

In the Delaware Court of Chancery, Chancellor Kathaleen McCormick is hearing lawyers for both sides argue for some major discovery motions (three from each side); a challenge from Musk's team on confidentiality redactions; and Morgan Stanley's ( MS ) opposition to a Twitter motion to compel production of documents. (Twitter is seeking the turnover of texts between Musk and Morgan Stanley's James Gorman.)

Last Thursday, McCormick said she would allow Musk to amend his counterclaim to bring in facts around Twitter's ( TWTR ) $7.75M severance payment to whistleblower Peiter "Mudge" Zatko , though she said she would give hearing to Twitter's counter-request for additional discovery about early contacts between Musk and Zatko - a bid that Musk is resisting.

That and other discovery issues are set to come up in Tuesday's hearing, set for slightly more than three hours (and which may not result in an immediate ruling).

Twitter stock was flat on the day as the hearing began.

Monday was set to bring some key developments with depositions of Musk and Twitter ( TWTR ) CEO Parag Agrawal, but both of those will come at a later date . Musk's deposition has been rescheduled for Oct. 6-7 in Delaware, though that may yet be a placeholder.

Updated 3:08 p.m.: The hearing has taken a halfway break, after spending the first half focused on Musk's discovery motions.

As reported, the hearing on Twitter v. Musk et al. was focused primarily on a number of discovery motions - in essence, each side trying to get their hands on more of the other side's documents with the trial looming. In Twitter's case, it's looking for communications tied to Musk's Zatko-related amendments, and Musk's side is still pressing for more disclosures tied to Twitter's monetizable daily active user metric ((mDAU)), user active minutes, and the use of the term "stickiness."

For Musk's motions, one of them (on Slack message threads and production of account data) was mooted. The remaining arguments centered on a few issues, including Musk's attempt to seek an order for all nonpublic documents containing the search term mDAU within 10 terms of the search term "revenue"; and some contention that Twitter may have been improperly withholding some documents as legally privileged.

The first half seemed to spend its time in the weeds, with litigants poring over the issues but no key rulings for Musk as time starts to tick down in the case. The separate issue of Musk's texts with Morgan Stanley's James Gorman was supposed to have come up, but hasn't yet.

Twitter stock ( TWTR ) has risen slightly, to a 0.3% gain .

Updated 5:03 p.m.: The hearing has wrapped up with little decided - largely a victim of trying to hit eight major legal issues in one afternoon, and some incomplete issues at that.

The issue of disclosing more of Musk's communications with backer Morgan Stanley was largely punted. "I believe this motion was not fully developed at the time it was filed," McCormick said, though she says she doesn't fault Twitter for that, and she noted Morgan Stanley has agreed to provide logs that aren't fully completed.

"So I would like to see this process play out a little more and present it to me again in more granular detail," McCormick said to both sides.

Similarly, a Twitter motion for discovery of documents from Musk's data scientists' analysis got bogged down in disputes over redaction that ran the hearing close to its scheduled end.

The end of the hearing brought the most contentious (but also most rushed) portion: Twitter's motion toward sanctioning the Musk parties for an alleged deficient production of messages (specifically, on the disappearing-message service Signal).

Twitter notes Musk and his financial adviser denied using Signal, but the company's lawyers showed evidence of screenshots of Musk's Signal conversations regarding the transaction. The Musk side's response brought some exasperation on McCormick's part.

McCormick closed the hearing and took matters under advisement; if she responds in a typical time frame, there should be news-making rulings in the case within a day or two.

After starting the hearing flat, Twitter ( TWTR ) stock closed the day up 1.4% and after hours rose another 2.1% (amid some frustrated words McCormick expressed toward Musk's team).

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