Elon Musk wins dismissal of $500 million lawsuit over Twitter severance payments

In a recent court decision, Elon Musk emerged victorious in a lawsuit alleging that he failed to pay over $500 million in severance to thousands of Twitter employees following mass layoffs. U.S. District Judge Trina Thompson in San Francisco ruled that the federal Employee Retirement Income Security Act (ERISA) did not apply to the claims made by the former employees, thus resulting in her lack of jurisdiction.

Plaintiffs' Response and Musk's Silence

Following the court ruling, no immediate response was provided by the plaintiffs' legal representatives. Similarly, Elon Musk's attorneys also refrained from commenting on the matter.

Background on Lawsuit

The lawsuit was one among several others accusing Musk of failing to honor commitments made to former Twitter employees and vendors post the acquisition of the social media company, now known as X. Musk acquired Twitter for a staggering $44 billion in October 2022.

According to the complaint, Twitter's severance plan for 2019 stipulated that employees who remained with the company post-acquisition would receive two to six months of pay, along with an additional week of pay for each year of service in the event of layoffs. Instead, the plaintiffs, Courtney McMillian and Ronald Cooper, alleged that fired employees were only offered one month of pay as severance, without any accompanying benefits.

ERISA Ruling

Judge Thompson determined that ERISA did not extend to Twitter's post-buyout severance plan, citing the absence of an "ongoing administrative scheme" for reviewing claims case-by-case or providing benefits such as continued health insurance and outplacement services. As per the judge's ruling, only cash payments had been promised, thereby excluding the claims from ERISA coverage.