Elon Musk hit with major setback, loses bid to dismiss ex-Twitter CEO’s severance lawsuit
Elon Musk was dealt a significant setback in a court fight over his purge of Twitter Inc.’s top executives when he took over the company in 2022.
Elon Musk was dealt a significant setback in a court fight over his purge of Twitter Inc.’s top executives when he took over the company in 2022.
A judge ruled late Friday that former chief executive officer Parag Agrawal and other high-ranking officers can proceed with claims that Musk terminated them right as he was closing the deal to cheat them out of severance pay before they could submit resignation letters.
In the complaint the ex-executives filed in March, they cited a passage in Walter Isaacson’s biography of Musk in which the billionaire is quoted telling the author as he rushed to complete the acquisition there was a “200-million differential in the cookie jar between closing tonight and doing it tomorrow morning.”
Musk has been fighting legal claims for back pay by thousands of Twitter staff he laid off when he acquired the social media company for $44 billion two years ago and rebranded it as X Corp.
At least one former employee was awarded unpaid severance in September in a closed-door arbitration that could set a precedent for other similar cases, the worker’s lawyer told Bloomberg News.
In July, Musk and X Corp. defeated a lawsuit alleging that at least $500 million in severance pay was owed to about 6,000 laid-off employees under provisions of the federal Employee Retirement Income Security Act.
US District Judge Maxine Chesney on Friday rejected arguments by Musk’s lawyers that Agrawal’s claims should be dismissed. Agrawal was joined in the lawsuit by Vijaya Gadde, who was Twitter’s top legal and policy official; Ned Segal, the chief financial officer; and Sean Edgett, the company’s general counsel.
They allege they’re owed severance benefits equal to one year’s salary plus unvested stock awards valued at the acquisition price.
Chesney is overseeing two other suits brought by Twitter executives, including one by Nicholas Caldwell, who was general manager for “core tech” and is seeking $20 million as compensation for lost severance. The judge on Friday denied Musk’s request to dismiss a claim by Caldwell that mirrors Agrawal’s allegations.
Representatives of X didn’t immediately respond outside regular business hours to a request for comment.
The case is Agrawal v. Musk, 24-cv-01304, US District Court, Northern District of California (San Francisco).