Elon Musk Wins Dismissal of $500 Million Damage Suit

Elon Musk dismisses lawsuit alleging he refused to pay at least $500 million in compensation. Former employees have alleged that Musk refused to pay severance to thousands of Twitter employees laid off after his takeover of the social media company, now known as X.

The complaint was filed by Courtney McMillian, who ran Twitter’s compensation and benefits, and Ronald Cooper, its operations manager. The complaint said Twitter’s severance plan promised employees who stayed on after the buyout two to six months of pay, plus an additional week of pay for each year of service if they were fired. However, they said Twitter only offered one month of severance pay with no additional benefits to those who were fired.

The lawsuit is one of several accusing Musk of failing to fulfill obligations to former Twitter employees, including former CEO Parag Agrawal, and various suppliers after he bought the company for $44 billion in October 2022.

On Tuesday, July 9, U.S. District Judge Trina Thompson in San Francisco ruled that the federal Employee Retirement Income Security Act (ERISA), which governs benefit plans, does not apply to the former employees’ claims and therefore she has no jurisdiction over the case.

The court further found that ERISA did not cover Twitter’s post-acquisition severance plan because there was no “ongoing administrative plan” that included an individual assessment of claims or benefits, such as ongoing health insurance and outplacement services.

The judge noted that while employees laid off in Twitter’s mass layoffs in 2022 and 2023 can try to amend their complaint, it will only be valid for claims not covered by ERISA.