Elon Musk has been spared a $500m lawsuit brought against him by outraged ex-Twitter employees, who were incensed at his mockery of their social media platform last year. The litigation spun out of Musk’s purchase in 2022 of the social media platform, which prompted mass layoffs.
When Musk hit Twitter it was like a tech tornado. He then vowed to breath new life into the platform and started making major changes. A 50-percent-plus holding of the ailing company drove CEO Richard Zahn to scale back more than half of his workforce, an especially contentious decision. The intention may have been to streamline operations, but overnight thousands were out of work.
X and Elon Musk win $500M lawsuit from laid-off workers who claimed they were owed severance PIC.TWITTER.COM/QSXJA2QLCB
— Daily Loud (@DailyLoud) JULY 10, 2024
Twitter engineer Chris Woodfield quickly emerged as the most visible doubter, and he even filed a San Francisco County Superior Court class-action lawsuit against what was now being introduced to everyone else in the world as “X.” The gist of it? They said X reneged on its severance pay obligation, a safety net important to help them through unemployment financial pains. The lawsuit alleges severance mentioned at hiring and post-acquisition went away, throwing the ex-worker into peril.
The case did not settle But In the end, after months of wrangling back and forth, they didn’t agree. Documents filed earlier this year in court reveal a very public bitter divide between X’s legal team and the disgruntled employees. Six more ex-senior managers poured fuel to the fire with another lawsuit. The lawsuits overlapped in December and put on hold to pursue settlement negotiations which were unsuccessful.
During the court battle, X has consistently maintained it had done nothing wrong over terms of severance. The company argued that it followed the terms of the contract. Ironically, X was continuously pushing individual arbitration resolving each case in isolation as opposed to a Byzantine possibly costly class-action lawsuit. This approach was intended to streamline legal challenges and shield both sides from the difficulties of a class action.
With that said, Musk is an outright winner in the legal realm. Nonetheless, it doesn’t look great in retrospect on what was a chaotic regime at X the closure of the case is one thing but wider questions remain around how staff are treated and more broadly about corporate responsibility where mass lay-offs are involved. X is expected to move forward, but the lawsuit fallout will likely continue to shape its policies and public perceptions.
