A group of former top Twitter executives led by ex-CEO Parag Agrawal and former top lawyer Vijaya Gadde, have won $1.1 million in legal fees from the social-media platform, rebranded as X by its new owner Elon Musk.
Delaware Chancery Court Judge Kathaleen St. J. McCormick ruled Tuesday that Twitter violated its duties to cover legal expenses generated by the group’s work for the company.
The former executives led by the two top Indian American officials argued Twitter violated its own bylaws by refusing to cover the sums even though they were tied to investigations of the social-media platform’s operations. They were ousted when billionaire Musk bought the company for $44 billion last year.
READ: Parag Agarwal, other ousted executives sue Twitter (April 11, 2023)
The company has paid about $600,000 of what it owes, but has withheld $1,158,427 in fees for lawyers’ work representing the former top managers in a congressional inquiry into the influence of social media on US elections, which required Gadde to appear before the House Committee on Oversight and Reform, according to legal filings.
Bloomberg cited Michael Blanchard, one of the company’s lawyers, as saying X officials got “sticker shock” when they got the bill from Gadde’s lawyers, which they found to be “quite excessive.”
Blanchard said the fees weren’t for litigation “that’s going to go for several years,” but instead were for “one-day of testimony.” X officials considered the request a “clear abuse” of the firm’s legal duty to indemnify executives for work on behalf of the company.
David Anderson, a lawyer for the former Twitter executives, countered X officials wrongfully suggested Gadde had run up excessive fees as revenge for being forced out of the company.
The case boiled down to “ongoing delays” in paying legal fees that were mandated under Agawal’s and Gadde’s employment contracts, he added.
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After hearing arguments, McCormick noted Delaware courts lean in favor of granting executives’ request to have legal fees covered when tied to their actions on behalf of companies. She said she didn’t see any reason to deviate from the norm in the case.
“I have reviewed the amount in question, and although it is high and probably higher than most humans would like to pay, it’s not unreasonable,” she said.