Elon Musk has triumphed in a lawsuit demanding at least $500 million in severance payments to thousands of Twitter employees laid off after his acquisition of the social media giant, now known as X. On Tuesday, US District Judge Trina Thompson in San Francisco dismissed the case, ruling that the federal Employee Retirement Income Security Act (ERISA), which oversees benefit plans, did not cover the former employees’ claims. This ruling effectively removed her jurisdiction over the matter.
For Musk, who is still facing numerous lawsuits against his business dealings at X, Tesla, and SpaceX, this ruling is a major legal victory. These instances involve a variety of accusations, such as retaliatory terminations, defamation, and gender discrimination.
This complaint is one of many that charge Musk of betraying agreements he made with vendors and former Twitter workers, including the firm’s former CEO, Parag Agrawal, after he paid $44 billion to acquire the company in October 2022. Lawyers for Musk and the plaintiffs have not yet responded to the decision.
Musk, one of the wealthiest individuals globally, was accused of failing to provide proper severance to Twitter employees after reportedly terminating about 80% of the workforce in the months following his takeover. Plaintiffs argued that employees received only one month of severance pay without benefits, contrary to the more substantial package promised under a 2019 severance plan.
Judge Thompson determined that ERISA did not apply to Twitter’s post-acquisition severance plan because it lacked an “ongoing administrative scheme” to review claims individually or offer continued benefits such as health insurance and outplacement services. “There were only cash payments promised,” she noted.
The judge left the door open for the plaintiffs to amend their complaint, provided they pursued claims not governed by ERISA. This legal battle is just one chapter in the ongoing scrutiny of Musk’s management style and the sweeping changes he has implemented across his companies.
