The judge ruled that X Corp, formerly Twitter, violated its contracts when it failed to pay out bonuses promised to employees in 2022.
US District Judge Vince Chhabria has ruled that X Corp, formerly Twitter, violated its contracts when it failed to pay out millions in bonuses that were promised to employees in 2022.
The case was brought on by Mark Schobinger, formerly the senior director of compensation at Twitter, who sued the company in June on claims of breach of contract, on behalf of roughly 2,000 current and former employees.
Schobinger left the company in May, one month prior to filing the lawsuit.
Schobinger alleged that both before and after its acquisition by Elon Musk in 2022, the company promised to pay employees 50 per cent of their 2022 target bonuses – a promise which never actualised.
Judge Vince Chhabria ruled that Schobinger’s claim constituted a breach of contract under California law.
“Once Schobinger did what Twitter asked, Twitter’s offer to pay him a bonus in return became a binding contract under California law,” wrote Chhabria.
“And by allegedly refusing to pay Schobinger his promised bonus, Twitter violated that contract.”
The corporation’s lawyers argued that the case should be governed by Texas law, and that the oral promise made to employees did not constitute a contract.
However, Chhabria ruled that the case would be governed by California law, and that “Twitter’s contrary arguments all fail”.
The company denies all wrongdoing and is expected to appeal the court’s decision.
The case is one of many filed against Twitter and its current owner, Elon Musk, since his takeover last year.
Other lawsuits include grievances over unpaid employee severance packages, a claim of trademark infringement by X Social Media, a copyright infringement case by the National Music Publishers’ Association, and more.
X Corp itself has instigated a lawsuit against the state of California over transparency laws which would require the company to publish its policies for policing disinformation, harassment, hate speech and extremism on the platform, which X argues is in violation of the right to free speech under the US Constitution’s First Amendment.
Twitter/X Corp is now valued at less than half the US$44 billion ($64.7 billion) paid by Musk last year.
