Twitter Severance Plan Class Action

Case type: ERISA

Filed in: U.S. District Court for the Northern District of California

Docket: Case no.: 3:23-cv-03461

Case summary

On July 12, 2023, Sanford Heisler Sharp filed a class action lawsuit against X Corp. (formerly Twitter), its parent company X Holdings, and owner Elon Musk for failing to provide promised severance benefits owed to terminated employees, and for failing to communicate accurately and truthfully with employees about the severance plan benefits, in violation of the Employee Retirement Income Security Act (ERISA).

The Complaint was filed on behalf of a class of thousands of employees who were subject to the mass layoffs that Mr. Musk initiated shortly after taking over Twitter on October 27, 2022. The terminated employees were denied the promised severance benefits.

Amid widespread skepticism about Mr. Musk’s ability to run Twitter, the Complaint documents numerous instances during the merger process in which Mr. Musk and the defendants gave assurances to employees that the severance plan agreement would be honored. The Complaint alleges that these promises were necessary to prevent mass resignations that would potentially threaten the viability of the merger deal.

The Complaint seeks a court order compelling X Corp. and Mr. Musk to abide by the terms of the Plan; the appointment of independent fiduciaries to monitor the plan; and other forms of monetary relief dating to when Mr. Musk took over Twitter.