Twitter Severance Plan Class Action

Case type: ERISA

Filed in: U.S. District Court for the Northern District of California;
United States Court of Appeals for the Ninth Circuit

Dockets Numbers: 3:23-cv-03461; 24-5045

Case summary

On July 12, 2023, Sanford Heisler Sharp McKnight 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 case is currently on appeal before the U.S. Court of Appeals for the Ninth Circuit, and the U.S. Department of Labor filed an Amicus Brief in support of Plaintiffs. 

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 Complaint alleges that the terminated employees were denied the promised severance benefits. The Complaint documents numerous instances during the merger process in which Mr. Musk and the defendants gave assurances to employees, amid widespread skepticism about Mr. Musk’s ability to run Twitter, that the severance plan agreement would be honored. The Complaint further 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.