BTN News: Elon Musk and X, formerly known as Twitter, have won a major legal battle. A California court agreed to dismiss a $500 million lawsuit against them. But this does not mean their legal troubles are over.
District Court Judge Agreed to Dismiss Class Action Lawsuit Due to ERISA Not Being Applicable
On Tuesday, a district court judge dismissed a class action lawsuit. The court agreed with the defendants that the Employee Retirement Income Security Act (ERISA) did not apply. The plaintiffs had accused X and Musk of violating ERISA. But the court found that ERISA was not relevant, which ended the lawsuit.
Details and Legal Battle Over Mass Layoffs and Severance Pay Allegations
The lawsuit was first filed last July. It accused Musk and X of failing to meet obligations in the mass layoff of nearly 6,000 former employees. After Musk acquired Twitter in October 2022, he reduced the workforce by at least 70%.
The complaint said the laid-off workers were offered only one month’s salary. This was much less than the benefits promised in the company’s severance plan. This plan had been in place since at least 2019. Musk’s merger agreement said the employees would get severance and benefits “not less than those offered immediately before the acquisition.”
Court’s Decision and Future Implications for Plaintiffs and Defendants
Even though the court dismissed the case, it did not make a judgment on the facts. The judge said the plaintiffs could file their complaint again with different claims. They could claim breach of contract or violation of specific laws.
The main issue was whether the severance plan was under ERISA. ERISA requires an ongoing system to determine claims and benefits. The court decided that X’s plan did not meet this because it used set formulas and calculations instead of case-by-case decisions. So, ERISA did not apply.
Possibility of Further Legal Action by Plaintiffs Against X and Elon Musk
This dismissal does not clear X from the claims of unpaid severance. It just means the plaintiffs must use different legal reasons, like breach of contract, instead of federal labor laws. They have three weeks to file a new complaint with these claims.
Ongoing Legal Challenges and Previous Claims by Former Twitter Executives
Whether the plaintiffs refile or not, X’s legal problems are not over. A group of former Twitter executives already sought $128 million in severance pay in March. Another claim for $19.3 million was filed in April. In September, Musk agreed to settle severance claims for nearly 2,000 former employees.
The court’s order on Tuesday showed that at least six lawsuits claiming wrongful termination have been filed against X. There are also five wage and discrimination lawsuits. These ongoing cases show the unresolved issues from Musk’s acquisition and changes to Twitter.
Conclusion and Summary of Current Legal Issues and Future Outlook for X and Musk
Elon Musk and X’s court win is significant, but their legal issues continue. The dismissed lawsuit allows plaintiffs to refile with different claims. Many other legal issues related to the layoffs are still active. The legal situation for X and its former employees will likely remain complex and changing.
