(Bloomberg) — Elon Musk has suffered a significant setback in a lawsuit over his purge of Twitter Inc.’s top executives. when he took over the company in 2022.
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A judge ruled late Friday that former CEO Parag Agrawal and other senior officials can move forward with claims that Musk legitimately terminated them when he was making 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 from Walter Isaacson’s biography of Musk, in which the billionaire is quoted telling the author that as he rushed to complete the acquisition, there was a “ difference of 200 million in the cookie jar was between closing tonight and closing tomorrow morning.
Musk is fighting legal claims for back pay from thousands of Twitter employees he fired when he bought the social media company for $44 billion two years ago and renamed it 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 employee’s attorney told Bloomberg News.
In July, Musk and X defeated Corp. a lawsuit alleging that at least $500 million in severance pay was owed to approximately 6,000 laid-off employees under provisions of the federal Employee Retirement Income Security Act.
U.S. District Judge Maxine Chesney on Friday rejected arguments from Musk’s lawyers that Agrawal’s claims should be dismissed. Agrawal was joined in the lawsuit by Vijaya Gadde, Twitter’s chief legal and policy officer; Ned Segal, the chief financial officer; and Sean Edgett, general counsel of the company.
They claim they are owed a severance payment equal to one year’s salary plus unvested shares, valued at the acquisition price.
Chesney is overseeing two other lawsuits filed by Twitter executives, including one by Nicholas Caldwell, who was chief executive of “core tech” and is seeking $20 million in compensation for lost severance. The judge on Friday denied Musk’s request to dismiss a claim by Caldwell that mirrors Agrawal’s allegations.
Representatives for X did not immediately respond to a request for comment outside regular business hours.
The case is Agrawal v. Musk, 24-cv-01304, US District Court, Northern District of California (San Francisco).
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