A federal judge ruled on Friday that X Corp (formerly Twitter) failed to pay millions in promised bonuses to employees, supporting a lawsuit filed by former senior director of compensation, Mark Schobinger. Schobinger sued the company in June, alleging breach of contract. He claimed that Twitter, both before and after its acquisition by Elon Musk, promised employees 50% of their 2022 target bonuses but did not fulfill these payments.
U.S. District Judge Vince Chhabria denied Twitter’s motion to dismiss the case, ruling that Schobinger had plausibly stated a breach of contract claim under California law. The judge held that Twitter’s offer of a bonus became a binding contract once Schobinger met the company’s conditions, and by not paying the bonus, Twitter violated this contract.
Twitter’s lawyers argued that the promise was only verbal and not a contract, and that Texas law should apply to the case. However, Judge Chhabria determined that California law governed the matter and dismissed Twitter’s counterarguments.
X Corp, currently without a media relations office, did not immediately respond to requests for comments. The company has faced several lawsuits since Musk’s takeover, involving allegations of discrimination and failure to provide advance notice for mass layoffs, all of which the company denies.
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