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Elon Musk beats $500M severance lawsuit by fired Twitter workers

REUTERS/GONZALO FUENTES/FILE PHOTO
                                Elon Musk, Chief Executive Officer of SpaceX and Tesla and owner of X, formerly known as Twitter, attends the Viva Technology conference dedicated to innovation and startups at the Porte de Versailles exhibition center in Paris, France, in June 2023.
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REUTERS/GONZALO FUENTES/FILE PHOTO

Elon Musk, Chief Executive Officer of SpaceX and Tesla and owner of X, formerly known as Twitter, attends the Viva Technology conference dedicated to innovation and startups at the Porte de Versailles exhibition center in Paris, France, in June 2023.

Elon Musk won the dismissal of a lawsuit claiming he refused to pay at least $500 million of severance to thousands of Twitter employees he fired in mass layoffs after buying 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 governing benefit plans did not cover the former employees’ claims, and therefore she lacked jurisdiction.

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

The case is one of many accusing Musk of reneging on promises to former Twitter employees, including former Chief Executive Parag Agrawal, and vendors after buying the company for $44 billion in October 2022.

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

According to the complaint, Twitter’s 2019 severance plan called for employees who stayed on after the buyout to receive two or six months of pay, plus one week of pay 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.

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 out placement services.

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

The judge said the plaintiffs can try amending their complaint, but only for claims not governed by ERISA.

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

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