Elon Musk has won the dismissal of a lawsuit claiming he refused to pay at least $500 million in severance to thousands of Twitter employees he laid off after acquiring the social media company now known as X. U.S. District Judge Trina Thompson in San Francisco ruled on Tuesday that the federal Employee Retirement Income Security Act (ERISA) governing benefit plans did not cover the former employees’ claims, and therefore she lacked jurisdiction. The case is one of many accusing Musk of reneging on promises to former Twitter employees and vendors after buying the company for $44 billion in October 2022.
According to Forbes magazine, Musk also runs the electric car company Tesla and is recognized as the world’s richest person. According to court documents, Twitter’s 2019 severance plan called for employees who stayed after the buyout to receive two to six months of pay plus one week for each year of employment if they were laid off. The plaintiffs Courtney McMillian, who oversaw Twitter’s compensation and benefits, and Ronald Cooper, an operations manager, said Twitter instead offered fired employees just one month of pay as severance, with no benefits.
Judge Thompson said ERISA didn’t apply to Twitter’s post-buyout plan because there was no “ongoing administrative scheme” where the company reviewed claims case-by-case or offered benefits such as continued health insurance and outplacement services.
Musk wins lawsuit on severance payments
“There were only cash payments promised,” she wrote.
The judge said the plaintiffs could try amending their complaint, but only for claims not governed by ERISA. Lawyers for the plaintiffs did not immediately respond to requests for comment on Wednesday, and Musk’s lawyers also did not immediately respond to similar requests.
The case is McMillian et al. v. Musk et al., U.S. District Court, Northern District of California, No. 23-03461.
