Judge Rules in Favor of Elon Musk, Twitter in Severance Pay Lawsuit


A US court on Wednesday dismissed a lawsuit claiming Elon Musk refused to pay at least $500m in severance to thousands of Twitter employees he fired in mass layoffs after buying the social media company now known as X.


US district judge Trina Thompson in San Francisco ruled on Tuesday that the federal Employee Retirement Income Security Act (Erisa) governing benefit plans did not cover the former employees’ claims, and therefore she lacked jurisdiction.


Afam Osigwe

Chukwuemeka Mbamala

Chukwuemeka Mbamala


The decision marks a legal victory for Musk, who still faces numerous lawsuits over his business practices at companies including X, Tesla and SpaceX. The cases range from allegations of gender discrimination and defamation to engaging in retaliatory firings


The case is one of many accusing Musk of reneging on promises to former Twitter employees, including the chief executive Parag Agrawal, and vendors after he bought the company for $44bn in October 2022.


Lawyers for the plaintiffs did not immediately respond to requests for comment on Wednesday. Musk’s lawyers did not immediately respond to similar requests.


Musk, one of the richest people in the world, was accused of failing to pay Twitter employees appropriate severance after claiming to have fired about 80% of the company in the months after his takeover. Plaintiffs alleged employees received only one month of severance pay with no benefits, instead of the far more generous package they were entitled to as part of a 2019 severance plan.


Thompson said Erisa did not apply to Twitter’s post-buyout plan because there was no “ongoing administrative scheme” in which the company reviewed claims on a case-by-case basis, or offered benefits such as continued health insurance and outplacement services.


“There were only cash payments promised,” she wrote.


The judge said the plaintiffs could try amending their complaint, but only for claims not governed by Erisa.


Musk’s lawyers were also in court this week for the latest legal battle over his contested multibillion-dollar pay package as CEO of Tesla. A judge must rule whether lawyers who successfully argued for the court to invalidate Musk’s payment should be awarded $7bn in legal fees, a sum that would be the largest of its kind in the history of US courts






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