A federal judge in California has dismissed a class action lawsuit filed against Elon Musk, the billionaire owner of the social media platform X, that alleged he owed more than $500 million in severance pay to thousands of employees he fired soon after purchasing the company in late 2022.
The complaint was filed by Courtney McMillian, who managed the company’s salary and benefits plans until October 2022, and Ronald Cooper, who was an operations manager at what was then known as Twitter through late February 2023, according to court filings.
The pair alleged thousands of ex-Twitter staffers who were let go soon after Musk bought the company for $44 billion were owed, collectively, at least $500 million in payouts, PC Mag reported.
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The lawsuit claimed Musk failed to follow the severance policy set by Twitter since at least 2019, well before he took over the company. Instead, employees who were terminated during mass layoffs were given just one month’s worth of pay, filings say.
But U.S. District Judge Trina Thompson sided with arguments made by Musk’s attorneys, who claimed Twitter did not have a severance plan governed by the Employee Retirement Income Security Act, a federal statute that sets standards for most retirement and health plans in the private sector.
“[T]herefore the court lacks jurisdiction,” Thompson wrote in her order on Tuesday.
“Each claim is predicated on the existence of provisions in an ERISA governed plan that are supposed to apply to laid off employees after Twitter’s takeover in October 2022,” Thompson wrote. “So, if there are insufficient facts alleged in the complaint to support ERISA governing this 2022 severance plan, then the Defendants’ Motion to Dismiss must be granted.
“After the takeover or merger, there were only cash payments promised. There were no promises to continue healthcare benefits or outplacement services provided by a third-party and there were no eligibility determinations beyond being terminated.”
She added: "Communications were made by Defendants showing that the named Plaintiffs would no longer have access to the earlier plan.”
According to Thompson, the two defendants have three weeks to amend their complaint with non-ERISA related claims.
Even with the dismissal, though, Musk is still facing several other, ongoing lawsuits from ex-Twitter employees who were let go soon after he took over.
