US Judge Rules Twitter Breached Contract, Failed to Pay Millions in Bonuses

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A federal judge has ruled that Twitter, now referred to as X Corp, violated contracts by failing to fulfill promised bonuses amounting to millions of dollars for its employees. The ruling, handed down by U.S. District Judge Vince Chhabria on Friday, came in response to a lawsuit filed by Mark Schobinger, Twitter’s former senior director of compensation, who departed Elon Musk’s company in May and sued Twitter in June for breach of contract.

Schobinger’s legal action contended that both before and after Elon Musk acquired Twitter last year, the company assured its employees of receiving 50% of their 2022 target bonuses, yet these payments were never made.

Judge Chhabria dismissed Twitter’s attempt to have the case dismissed, emphasizing that Schobinger had credibly asserted a breach of contract claim under California law, maintaining that he was covered by a bonus plan. The judge’s ruling asserted that Twitter’s promise to pay Schobinger a bonus became a binding contract under California law once he fulfilled the requirements expected by Twitter. By allegedly reneging on the promised bonus, Twitter was found to have violated that contract.

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X Corp, which no longer maintains a media relations office, did not immediately respond to requests for comments made outside regular business hours through its X account.

Twitter’s legal defense argued that the promise made was purely oral and did not constitute a legally binding contract. They also contended that Texas law should govern the case. However, Judge Chhabria disagreed, ruling that California law should apply, and dismissed Twitter’s arguments against this decision.

Since Musk’s acquisition of the company and the subsequent reduction of over half of its workforce, X Corp has faced multiple lawsuits from former employees and executives. These legal actions encompass various claims, including allegations of discrimination against older employees, women, and workers with disabilities, as well as the failure to provide advance notice of substantial layoffs. X Corp, however, refutes any allegations of wrongdoing.