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Elon Musk Wins Dismissal of $500M Compensation Suit Filed by Fired Twitter Employees

Billionaire Elon Musk dismissed a lawsuit filed by former Twitter employees seeking $500 million in damages that Musk allegedly refused to pay after taking over the social media company, now known as X.

On Tuesday, U.S. District Judge Trina Thompson in San Francisco issued a ruling finding that the former Twitter employees’ claims were not covered by the federal Employee Retirement Income Security Act (ERISA), which governs benefit plans, and therefore she lacked jurisdiction to dismiss their claims under that law.

The lawsuit alleged that under Twitter Shutdown Planworkers who stayed on after Musk’s ownership group acquired the company for $44 billion would have received two or six months of pay, plus one week of pay for each year of employment, if they were laid off. The lawsuit was originally filed in July 2023.

The lawsuit was filed by Courtney McMillian, Twitter’s head of compensation and benefits, and Ronald Cooper, its chief operating officer, who said the company violated that plan by offering laid-off employees a month’s salary with no benefits.

TWITTER HAS BEEN HIDDEN WITH A LAWSUIT THAT SLAMS FORMER EMPLOYEES TO BE owed at least $500 MILLION IN SETTLEMENT PAYMENTS

A judge on Wednesday dismissed claims by former Twitter employees that Elon Musk did not take advantage of the company’s severance plan, which relied on a federal employee benefits act. (Apu Gomes/Getty Images/Getty Images)

The judge found that ERISA did not apply to Twitter’s post-buyout plan because it did not include a “standing administrative program” under which the company would review claims on a case-by-case basis or offer benefits such as continued health insurance or outsourcing services.

“Only cash payments were promised,” Thompson wrote.

Thompson said employees who were laid off in Twitter’s mass layoffs in 2022 and 2023 could try change your lawsuitbut only with respect to claims not covered by ERISA.

ELON MUSK SUED BY ousted TWITTER EXECUTIVES FOR $128 MILLION SEVERANCE PAYMENT

After completing the takeover of the company, Musk laid off about half of Twitter’s employees, saying the cuts were necessary to limit financial losses. (Elon Musk’s X Account/AFP via Getty Images / Getty Images)

Musk said at the time that Twitter mass layoffs were necessary to prevent bankruptcy, as the company was losing $4 million a day at the time of the takeover.

The company and Musk face other lawsuits alleging he failed to keep promises he made to Twitter employees, including former CEO Parag Agrawal, as well as suppliers after he acquired the company.

MUSK WANTS TO END TWITTER LAWSUIT, SUGGESTS LATE DISCLOSURE WAS A MISTAKE

Musk’s ownership group completed its acquisition of Twitter in October 2022, following a legal battle in which he attempted to withdraw the purchase. (Justin Sullivan/Getty Images/Getty Images)

Agrawal filed his lawsuit along with several others former Twitter executivesincluding Chief Financial Officer Ned Segal, General Counsel Vijaya Gadde and General Counsel Sean Edgett.

A group of former Twitter executives are seeking $128 million in severance pay that they say Musk refused to pay them after firing them for cause — a move they say was intended to deprive them of severance pay they would otherwise be entitled to under their contract.

Musk also has to deal with a lawsuit related to the Twitter acquisition filed by shareholders alleging that he and his financial advisor knowingly failed to comply with Securities and Exchange Commission A rule that requires disclosure of the acquisition of more than 5% of a company’s shares.

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In court papers filed last week, Musk said the delay in disclosing the information, which came 11 days after it was supposed to, was due to a misunderstanding of the rules and not an attempt to defraud shareholders. He added that he disclosed the information immediately after he realized his mistake.

Reuters contributed to this report.