Twitter Asks Court to Toss Workers’ Post-Merger Severance Suit

Laid-off workers who say Twitter Inc.'s merger agreement promised them severance are neither parties to nor beneficiaries of the contract, so the case should be thrown out, the company told a federal judge.

The former workers lack standing to seek severance benefits based on the agreement that gave Elon Musk control of the social media platform late last year because they didn’t sign the deal and it didn’t include them in a list of limited third-party beneficiaries, according to the dismissal motion Twitter filed in the US District Court for the District of Delaware.

The workers filed a would-be class suit accusing Twitter, which recently changed its name to X Corp., of breaking its commitment to pay them severance when they lost their jobs or resigned as part of a wave of layoffs that began when Musk took over the company in November 2022. Musk isn’t named as a defendant.

A federal court in California transferred the workers’ severance claims to Delaware in late April after sending the named plaintiffs’ individual state and federal Worker Adjustment and Retraining Notification Act claims to arbitration.

The workers intended to find substitutes who weren’t subject to arbitration agreements to pursue the layoff-notice claims, but instead filed a separate WARN Act suit in early April and agreed to dismiss the claims from the instant suit without prejudice.

Another group of former Twitter workers filed their own non-class severance and layoff-notice suit in Delaware earlier this week. The company is also the target of age, sex, and disability discrimination allegations.

The merger agreement-based severance claims in the instant complaint should fail because the deal “specifically identifies certain individuals as third-party beneficiaries while twice disclaiming Plaintiffs as such,” Twitter said Wednesday.

The workers also seek severance through breach of contract and promissory estoppel claims, but those claims “derive from and are predicated upon the Merger Agreement,” so they’re doomed, too, Twitter said. The workers “fail to plausibly allege any contract between them and Twitter or any promise by Twitter upon which they could have reasonably relied” for severance, the company added.

Judge Colm F. Connolly is overseeing the case.

Morgan, Lewis & Bockius LLP represents Twitter. Lichten & Liss-Riordan PC and Wilmington, Del.-based Kate Butler represent the workers.

The case is Cornet v. Twitter Inc., D. Del., No. 1:23-cv-00441, motion filed 5/17/23.