In a recent development, a federal judge has ruled that Twitter, now rebranded as X Corp, violated contractual obligations by failing to fulfill promised bonuses amounting to millions of dollars for its employees. The decision resulted from a lawsuit filed by Mark Schobinger, the former senior director of compensation at Twitter, who left the company owned by Elon Musk in May and claimed breach of contract.
Allegations of Unfulfilled Bonus Commitments
Schobinger’s lawsuit asserted that before and after Elon Musk’s acquisition of Twitter last year, the company assured employees of receiving 50% of their targeted bonuses for 2022. However, Twitter allegedly failed to make the stipulated bonus payments, leading Schobinger to file a breach of contract claim.
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Judge’s Ruling on Contractual Violation
In response to Twitter’s motion to dismiss the case, U.S. District Judge Vince Chhabria upheld Schobinger’s claims, stating that he had plausible grounds for a breach of contract under California law. The judge emphasized that a bonus plan covered Schobinger, and once he fulfilled the required actions as per Twitter’s instructions, a binding contract was established. Consequently, Twitter’s refusal to pay the promised bonus was deemed a violation of the agreement.
Twitter’s Defense and Legal Jurisdiction
Twitter’s legal team argued that the promise was oral and did not constitute a formal contract. Additionally, they contended that Texas law should govern the case. However, Judge Chhabria dismissed these arguments, asserting that California law was applicable and that Twitter’s counterclaims were unsuccessful.
X Corp’s Response
X Corp, the rebranded entity resulting from Elon Musk’s acquisition, did not immediately respond to a request for comment regarding the ruling. Notably, the company no longer maintains a media relations office.
Ongoing Legal Challenges for X Corp
This ruling adds to the growing list of legal challenges faced by X Corp since Elon Musk’s acquisition of Twitter, which involved a significant reduction in the workforce. Various lawsuits, including claims of discrimination against older employees, women, and individuals with disabilities, as well as allegations of inadequate notice for mass layoffs, have been filed against the company. X Corp, however, denies any wrongdoing in these cases. The legal landscape surrounding X Corp continues to evolve as it navigates through these challenges.
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