By Jonathan Stempel
(Reuters) – Elon Musk has been dismissed in a lawsuit alleging he refused to pay at least $500 million in compensation 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 Tuesday that the federal Employee Retirement Income Security Act governing benefit plans did not cover former employees’ claims and therefore she did not had jurisdiction.
Lawyers for the plaintiffs did not immediately respond to requests for comment Wednesday. Musk’s lawyers did not immediately respond to similar requests.
The case is one of many that accuse Musk of reneging on promises he made to former Twitter employees, including former CEO Parag Agrawal, and suppliers, after buying the company for $44 billion in October 2022.
Musk also runs the electric car company Tesla and is the richest person in the world, according to Forbes magazine.
According to the complaint, Twitter’s 2019 severance plan called for employees who remained on the job after the acquisition to receive two or six months’ pay, plus one week’s pay for each year of employment, if they were fired.
Plaintiffs Courtney McMillian, who oversaw Twitter’s compensation and benefits, and Ronald Cooper, operations manager, said Twitter offered laid-off employees only one month’s pay as severance, with no benefits.
Thompson said ERISA did not apply to Twitter’s post-purchase plan because there was no “continuous administrative scheme” where the company reviewed claims on a case-by-case basis or offered benefits such as continued health insurance and outplacement services.
“There were only promises of cash payments,” she wrote.
The judge said plaintiffs can try to amend their claim, 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.
(Reporting by Jonathan Stempel in New York; Editing by Bill Berkrot)
