Twitter, now operating under the name X Corp, has been found in violation of contract terms for failing to pay promised bonuses to its employees, as ruled by a federal judge. The decision emerged from a lawsuit filed by Mark Schobinger, the former senior director of compensation at Elon Musk‘s social media company. Recently, there has been speculation about latent cash problems and insolvency scenarios for X.
Background of the Lawsuit
Schobinger, who left the company in May after Elon Musk’s acquisition, filed a lawsuit against Twitter in June. The suit alleged that the company, both before and after Musk’s takeover, had committed to paying 50% of the target bonuses for 2022 to its employees, a promise that was never fulfilled.
Judge’s Ruling on the Case
U.S. District Judge Vince Chhabria denied Twitter’s motion to dismiss the case, affirming that Schobinger had convincingly made a breach of contract claim under California law. The judge stated that once Schobinger fulfilled his part of the agreement, Twitter’s commitment to pay him a bonus became a legally binding contract. By not honoring this commitment, Twitter violated the contract, as per the judge’s ruling.
Twitter’s Defense and Legal Arguments
Twitter’s defense claimed that the bonus promise was merely an oral agreement and not a contractual obligation. The company’s lawyers also argued for the case to be governed under Texas law. However, Judge Chhabria determined that California law was applicable and dismissed all of Twitter’s counterarguments.
Legal Challenges for X Corp
Since Elon Musk‘s takeover of Twitter, the company, now known as X, has faced several lawsuits from former employees and executives. These lawsuits include allegations of discrimination against various groups, failure to provide advance notice of mass layoffs, and other claims. The company has consistently denied any wrongdoing.
Statements from Involved Parties
Shannon Liss-Riordan, Schobinger’s attorney, expressed satisfaction with the judge’s decision, noting that the case will proceed despite Twitter‘s efforts to have it dismissed. She clarified that the ruling was not yet on the merits of the case but allowed them to move forward with the legal process.
