Elon Musk Wins Dismissal Of $500 Mn Severance Lawsuit

Elon Musk has secured the dismissal of a lawsuit alleging he refused to pay at least USD 500 million in severance to thousands of Twitter employees he fired after acquiring the social media platform, now known as X. 

US District Judge Trina Thompson in San Francisco ruled that the federal Employee Retirement Income Security Act (ERISA), which governs benefit plans, did not cover the claims made by the former employees. Consequently, she declared that she lacked jurisdiction over the case.

The lawsuit is among several accusing Musk of reneging on promises to former Twitter employees, including former Chief Executive Parag Agrawal, and vendors following his USD 44 billion acquisition of Twitter in October 2022. 

The plaintiffs, Courtney McMillian, who oversaw Twitter’s compensation and benefits, and Ronald Cooper, an operations manager, claimed that Twitter’s 2019 severance plan promised employees who stayed on after the buyout two to six months of pay, plus one week of pay for each year of employment, if they were laid off. Instead, the plaintiffs argued, Twitter offered just one month of severance pay without any additional benefits.

Judge Thompson determined that ERISA did not apply to Twitter’s post-buyout severance plan because it lacked an “ongoing administrative scheme” involving case-by-case reviews or benefits such as continued health insurance and outplacement services. She said that only cash payments were promised under the plan. The judge indicated that the plaintiffs could amend their complaint but only for claims not governed by ERISA.

(Inputs from Reuters)