San Francisco: Elon Musk can breathe a sigh of relief as a court ruling in San Francisco has dismissed a lawsuit demanding he pay $500 million in severance to former Twitter employees. US District Judge Trina Thompson determined that the claims, which alleged Musk failed to fulfill severance obligations following his acquisition of Twitter (now X), did not fall under the purview of the federal Employee Retirement Income Security Act (ERISA), thus leading to the dismissal.
The lawsuit contended that Twitter’s 2019 severance plan entitled employees remaining after the acquisition to significant compensation if laid off, contrasting sharply with what was actually paid out. However, Judge Thompson’s ruling favored Musk, emphasizing that subsequent changes in the severance program post-acquisition were more relevant than the 2019 plan cited by the plaintiffs.
Former Twitter employee Courtney McMillian, a key plaintiff in the class-action lawsuit, along with others, now have the opportunity to amend their complaint to pursue claims not governed by ERISA. This opens the door for potential future legal action aimed at securing more substantial compensation.
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Despite this setback, the ruling underscores ongoing legal battles stemming from Musk’s $44 billion acquisition of Twitter in October 2022. Former employees continue to seek redress through various legal avenues, highlighting the complexity and contentious nature of severance disputes in corporate acquisitions.
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Judge Thompson’s decision, while a relief for Musk in this instance, leaves the door open for further legal proceedings as former employees strive to address their grievances in the aftermath of significant corporate restructuring.
