San Francisco, US – A recent lawsuit against Elon Musk, the billionaire entrepreneur, alleging that he failed to pay severance to former Twitter employees has been dismissed by a US district judge. The case involved thousands of employees who claimed they were not properly compensated following mass layoffs after Musk’s acquisition of Twitter, now known as X.
Judge Trina Thompson ruled that the federal Employee Retirement Income Security Act (Erisa) did not cover the claims made by the former employees, leading to a lack of jurisdiction in the case. This decision marks a legal win for Musk, who continues to face multiple legal battles related to his business practices at companies like X, Tesla, and SpaceX, including allegations of gender discrimination and retaliatory firings.
The lawsuit accused Musk of reneging on promises made to former Twitter employees, such as CEO Parag Agrawal, and vendors after the $44 billion acquisition of the company in October 2022. Allegations included Musk failing to provide the appropriate severance pay, offering only one month of payments without benefits instead of the more generous package outlined in a 2019 severance plan.
Thompson clarified that Erisa did not apply to Twitter’s post-buyout plan due to the absence of an “ongoing administrative scheme” for assessing claims on an individual basis or providing benefits like health insurance and outplacement services. Despite the dismissal, the plaintiffs may have the opportunity to amend their complaint for claims not governed by Erisa.
In a separate legal battle, Musk’s lawyers are currently in court fighting for the validity of his disputed multibillion-dollar pay package as the CEO of Tesla. A ruling is pending on whether lawyers who successfully argued against Musk’s payment should be awarded $7 billion in legal fees, potentially setting a record in US court history for such payouts.