Despite his legal efforts, Elon Musk was dealt a heavy setback last week when a judge ruled late Friday that the former chief executive officer, Parag Agrawal, and other high-ranking Twitter Inc. executives Musk dismissed in 2022 can move forward with their compensation claims.
Joining Agrawal’s legal case are Twitter’s former legal chief, Vijaya Gadde; the company’s former CFO, Ned Segal; and the former general counsel, Sean Edgett. The ex-Twitter executives claim that the SpaceX founder terminated them right as he was closing the deal, a move made to cheat the former executives out of their severance pay before they could submit their resignation letters. The plaintiffs allege that they are each owed one year’s salary plus unvested stock awards valued at the acquisition price.
In a ruling made late on November 1, a California district judge ruled that the former Twitter executives can sue Musk for terminating their roles with the social media company during Musk’s acquisition process and before they could effectively resign.
The Lawsuit’s Launching Point
Just minutes before Musk took control of Twitter, the ex-Twitter executives claim they were fired and falsely accused of misconduct by Musk, who ultimately forced them out of Twitter after they sued the Tesla founder for attempting to withdraw his offer to purchase the company. After Musk terminated the former executives, he denied them the severance pay they claim was promised long before he took control of Twitter, according to the lawsuit.
“This is the Musk playbook: to keep the money he owes other people, and force them to sue him,” the former executives said in the 39-page lawsuit.
The lawsuit, filed in March 2024, cites an excerpt from Walter Isaacson’s biography of Musk, in which the billionaire reportedly expressed urgency to complete the acquisition. Isaacson quotes the billionaire sharing with him that he rushed to complete the acquisition, as there was a “200-million differential in the cookie jar between closing tonight and doing it tomorrow morning.”
Musk Battles Other Fires
The former Twitter executives are not the only legal claims that Musk has been battling. Since acquiring Twitter for $44 billion two years ago and rebranding it as X, Musk has faced numerous legal claims for back pay from thousands of former employees he laid off following the acquisition.
According to Bloomberg News, at least one former Twitter employee has been awarded unpaid severance in September. The employee’s lawyer spoke with Bloomberg News, sharing that the severance was awarded in a closed-door arbitration that may set a precedent for similar cases Musk faces.
Still, Musk has managed to put out some court fires. In July, the SpaceX founder and X Corp. defeated a lawsuit that alleged at least $500 million in severance pay was owed to roughly 6,000 employees who were laid off under provisions of the federal Employee Retirement Income Security Act.
Another former Twitter executive who joined the ranks of Agrawal and other fired employees is its ex-chief marketing officer Leslie Berland, who alleges Musk fired her in an act of “petty retribution” after a meeting with advertisers went off the rails, and also to “rid himself of her large compensation package.”
Yet, Friday’s ruling by US District Judge Maxine Chesney dealt a blow to Musk and his legal team, who argued that Agrawal’s claims should be dismissed.
Chesney is also overseeing two other suits brought by Twitter executives, including one by the former general manager for “core tech,” Nicholas Caldwell. Caldwell is seeking $20 million in compensation for lost severance. The judge also denied Musk’s requests to dismiss Caldwell’s case on Friday.
Representatives of X have yet to respond to recent requests for comment.
