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Billionaire Elon Musk Former Twitter employees have won dismissal of a lawsuit they filed seeking $500 million in severance payments that Musk allegedly refused to pay them after he bought the social media company now known as X.
U.S. District Judge Trina Thompson in San Francisco ruled on Tuesday that she lacked jurisdiction to dismiss the claims brought by the former Twitter employees because they were not covered by the federal Employee Retirement Income Security Act (ERISA), which governs employee benefit plans.
In the lawsuit, Twitter’s retirement plansEmployees who remain after a group of shareholders led by Musk buys the company for $44 billion will receive two or six months’ pay if they are fired, plus one week’s pay for each year of service they have. The lawsuit was originally filed in July 2023.
The lawsuit, filed by Twitter’s head of compensation and benefits Courtney McMillian and operations manager Ronald Cooper, alleges that the company violated the plan by paying fired employees a month’s salary without benefits.
Twitter faces lawsuit seeking at least $500 million in severance payments from former employees
A judge on Wednesday rejected claims by former Twitter employees that Elon Musk waived their rights to the company’s retirement plans under federal employee benefits law. (Apu Gomez/Getty Images/Getty Images)
The judge said ERISA did not apply because Twitter’s post-acquisition plan did not include a “continuing management plan” under which the company would review claims on a case-by-case basis or provide benefits such as continuing health insurance or outplacement services.
“All we were promised was cash payment,” Thompson wrote.
Thompson said employees who are let go in Twitter’s mass layoffs in 2022 and 2023 will: Amend the lawsuitHowever, this only applies to claims not covered by ERISA.
Elon Musk sues Twitter executives for $128 million in severance pay
After the acquisition closed, Musk fired about half of Twitter’s employees, saying it was necessary to limit financial losses. (Elon Musk’s X Account/AFP via Getty Images / Getty Images)
Musk tweeted at the time. Mass layoffs At the time of the acquisition, the company was losing about $4 million a day and the move was necessary to avoid bankruptcy.
The company and Musk also face other lawsuits alleging that Musk broke promises to Twitter employees and vendors, including former CEO Parag Agrawal, after the company was acquired by the company.
Musk seeks to end Twitter lawsuit, suggests delaying disclosure was a mistake
Musk’s ownership group completed its acquisition of Twitter in October 2022 after a legal battle in which he tried to back out of the deal. (Justin Sullivan/Getty Images/Getty Images)
Agrawal filed the suit along with several others. Former Twitter executiveThey include CFO Ned Segal, Chief Legal Officer Vijaya Gadde and General Counsel Sean Edgett.
Former Twitter executives are seeking $128 million in severance pay after Musk fired them for cause and then refused to pay them, a move they say was designed to deny them the severance pay they were contractually entitled to.
Musk is also fighting a lawsuit in which shareholders claim he and his assets knowingly violated contracts related to his Twitter acquisition. Securities and Exchange Commission Rules requiring disclosure of acquisitions of more than 5% of a company’s shares.
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Musk said in a court filing last week that the disclosure was 11 days later than originally planned because he misunderstood the rules, not because he was trying to deceive shareholders, and that he disclosed the information as soon as he realized his mistake.
Reuters contributed to this report.
