Elon Musk Finds a Judge Who Means Business

Could a Delaware native who grew up just a few miles from the Chancery Court push Elon Musk to go through with his Twitter deal?

Kathaleen McCormick wasn’t having it. The Delaware judge hearing Twitter’s case vs. Elon Musk listened incredulously as Musk’s lawyers asked her to postpone the trial. Twitter, they said, had concealed damning vulnerabilities that its ex-head of security, Peiter Zatko, just revealed in a whistleblower report. Zatko’s claims didn’t come up in due diligence when Musk agreed to buy the company, and now they needed more time to sort through them. 

No such luck. “We’ll never know, right?” McCormick said, citing Musk’s hasty push toward the deal. “Because the diligence didn’t happen.” The trial would go on as planned, starting on October 17. 

Already, a month before the trial begins, Chancellor McCormick is dispatching with the notion that Musk is about to again bowl over the US legal system. The billionaire entrepreneur often seems unbound by law, tending to taunt those who’d dare enforce it, and leading a former Delaware Chancery Court judge to say the court might actually fear ruling against him. McCormick, who took the helm of the court in May 2021, is negating that assumption with each hearing.

Meeting the Challenge

“Unflappable,” is how Lawrence Hamermesh, a lawyer who spent nearly two decades in Delaware practice, and now runs Penn Law’s Institute for Law & Economics, described McCormick. 

“The chancellor’s already demonstrating she’s meeting the challenge,” said another practitioner who’s appeared before the court. 

If McCormick looked for ways to nullify this deal, she could certainly find them. Never before has a court forced a buyer to purchase a company for $44 billion against their will. And Musk may well decline to follow the order as well, throwing the court’s credibility into question. Finding an out and letting the deal fizzle might be easier than the extraordinary action of forcing it to close. And McCormick may indeed still do that. But she’s always been something of a pattern breaker.

A Humble Beginning

Kathaleen Saint Jude McCormick, known to her friends as Katie, was born in September 1979 in Dover, Delaware. McCormick grew up in the nearby town of Smyrna, the daughter of two public schoolteachers. Her father, Terry, coached Smyrna’s middling football team. Her mother, Kathaleen, eventually rose to become a school administrator.

Smyrna is a humble, middle-class town in a state replete with wealth, not a place known for producing judges who decide the country’s most consequential business cases. “There’s money in Delaware,” said Daniel Atkins, a Delaware attorney. “It ain’t in Smyrna.” McCormick nonetheless applied herself and became the only Smyrna High School grad to get into Harvard University at the time. 

At Harvard, McCormick majored in philosophy and seemed destined to follow her parents’ path into education, but then her trajectory diverted. She got involved in a local nonprofit that helped in landlord and tenant disputes, the Small Claims Advisory Service, and tasted how the law’s power could be used for good. Seeking more, McCormick enrolled in Notre Dame Law School, where she’d spend time at the university’s center for civil and human rights while her father’s beloved Fighting Irish played football nearby. 

Toward the end of her tenure at Notre Dame, McCormick wrote an email to the Community Legal Aid Society, a Delaware-based civil legal service provider. It landed with Atkins, the Delaware lawyer then leading recruiting there. The agency helps poor, disabled, elderly and marginalized people in civil cases where they have no right to an attorney. It fit right in line with McCormick’s human and civil rights interests. And plus, it was a way back to Delaware. 

“Katie was interested in coming back home,” Atkins said, “and so that was a really great opportunity for us.” Atkins hired McCormick, and right after graduating she joined the agency’s poverty unit, working primarily on housing discrimination. McCormick’s salary wasn’t comparable with private practice. “Not even close,” said Atkins, now the executive director. But the work aligned with her values and she quickly established herself. After a few years at Legal Aid, and with a growing family to support, McCormick moved into private practice. 

Related Article: Elon Musk and Twitter’s Business Are on a Collision Course

A Philosophy Major Joins the Court

The Delaware Chancery Court is the United States’ preeminent business court and, oddly, a perfect place for a philosophy major. Corporations and their boards of directors have duties to shareholders, leadership, employees and the public. In a capitalist system, the way they negotiate these duties shapes society. And the law helps determine their application. In other words, the Chancery Court was a great fit for Delaware native Katie McCormick.

After years of appearing before it in private practice, McCormick became vice chancellor of the Delaware Chancery Court in November 2018. Then, less than two years into her term, COVID hit and created the greatest business disruption in a generation. The pandemic forced McCormick to lean on her philosophy degree and consider what duty meant amid the chaos. Especially in the case of a cake decorator named DecoPac. 

DecoPac’s slogan is “On Top of the World’s Best Cakes.” It claims to be the world’s largest supplier of cake decorations to professional cake decorators and bakeries. And in March 2020, the private equity firm Kohlberg signed a deal to buy it from Snow Phipps, another private equity firm, for $550 million. Once lockdowns set in, demand for fancy cakes dropped, DecoPac’s sales plunged and Kohlberg tried to get out of the deal. Its attempt to wiggle out then landed in Delaware Chancery Court with Vice Chancellor McCormick

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