On Wednesday, a federal judge dismissed a lawsuit asserting that Elon Musk had not honored severance agreements totaling at least $500 million for thousands of Twitter staff who were let go during mass layoffs following the acquisition of the social media company now named X.
The US district court judge in San Francisco ruled on Tuesday that former employees' claims did not fall under the Employee Retirement Income Security Act (ERISA), which oversees benefit plans, and thus lacked jurisdiction. The ruling represents a legal victory for Musk amid numerous other lawsuits regarding his business practices across various companies like X, Tesla, and SpaceX, encompassing issues from gender discrimination to allegations of unjust terminations.
The case is part of the many similar cases accusing Musk of breaking promises made to past employees and vendors after acquiring Twitter in October 2022 for $44 billion. Critics argue that former employees were offered substandard severance packages, contrary to a more substantial package outlined in a 2019 plan.
In her decision, the judge stated that the 2019 severance agreement did not qualify under ERISA because it lacked an ongoing administrative process for handling claims and providing benefits like health insurance or retraining services; instead, only cash payments were promised upon termination.
The judge allowed plaintiffs to amend their lawsuit, but any claims outside of the scope of ERISA's reach may not be eligible. This week, Musk also faced a legal dispute regarding his multibillion-dollar remuneration as CEO at Tesla, with a judge deliberating on whether attorneys who challenged the legality of Musk's compensation could receive $7 billion in fees—a potential record payout in US court history.
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