Elon Musk wins $500 million severance lawsuit filed by fired Twitter employees

By Jonathan Stempel

(Reuters) – Elon Musk has won a dismissal of a lawsuit accusing him of refusing to pay at least $500 million in severance to thousands of Twitter employees he laid off in mass layoffs after buying the social media company now known as X.

U.S. District Judge Trina Thompson in San Francisco ruled Tuesday that the federal Employee Retirement Income Security Act governing benefit plans does not cover the former employees’ claims and therefore she lacks jurisdiction.

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

The case is one of several accusing Musk of reneging on promises he made to former Twitter employees, including former CEO Parag Agrawal, and suppliers after buying the company for $44 billion in October 2022.

Elon Musk also runs the electric car company Tesla and is the richest person in the world, according to Forbes magazine.

According to the complaint, Twitter’s 2019 severance plan provided that employees who remained after the buyout would receive two or six months’ pay, plus one week’s pay for each year of employment, if they were terminated.

Plaintiffs Courtney McMillian, who oversaw Twitter’s compensation and benefits, and Ronald Cooper, its chief operating officer, said Twitter instead offered the laid-off employees one month’s salary as severance, with no benefits.

Thompson said ERISA did not apply to Twitter’s post-acquisition plan because there was no “continuing administrative program” in which the company reviewed applications on a case-by-case basis or offered benefits such as continued health insurance and job placement services.

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

The judge said the plaintiffs can try to amend their complaints, but only for claims not governed by ERISA.

The case is McMillian et al v. Musk et al, United States District Court, Northern District of California, No. 23-03461.

(Reporting by Jonathan Stempel in New York; Editing by Bill Berkrot)

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