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Judge sides with Elon Musk, blocks class action lawsuit

By Sarah May on
 January 17, 2023

A federal judge on Friday provided Twitter CEO Elon Musk with a bit of good news by ruling that workers laid off from the social media firm last year may not pursue remedies through a class action lawsuit and must instead file individual arbitration claims, as Reuters reports.

The decision was handed down by U.S. District Judge James Donato, who cited the specific agreements the employees had previously entered into with Twitter in support of his opinion.

Improper notice alleged

Donato's decision represents a setback for former Twitter employees who filed a class action lawsuit following mass layoffs at the company Musk said were necessary to improve margins and reduce operating expenses in the wake of his October takeover of the company.

Five ex-Twitter staffers had filed suit claiming that the firm failed to give sufficient notice before terminating their employment, citing laws requiring a lead time of at least 60 days before mass action is taken.

The former workers further alleged that despite promises that they would receive three months of severance pay, they were ultimately only offered one month's pay, a breach of contract they believe is rightly the subject of a class action lawsuit.

Class action denied

Donato ultimately determined that the five former Twitter employees whose contracts with the company required arbitration in the event of a dispute of this nature could not persist in the present action and were compelled to pursue their claims through the foreordained process.

“Twitter provided signed copies of the [arbitration] agreements, and they are all clear and straightforward,” Donato declared.

Plaintiffs in the case had signed onto employment agreements providing that disputes, including those related to a job termination, would be “resolved only by an arbitrator through final and binding arbitration and not by way of court or jury trial,” Business Insider noted.

The agreements also stated, “You and the company agree to bring any dispute in arbitration on an individual basis only, and not on a class, collective, or private attorney general representative action basis.”

Also of note was the fact that the arbitration agreements were not made a “mandatory condition of employee's employment at the company,” and that it was possible for the plaintiffs to have opted out, though none of them had done so.

The judge indicated that he would make a ruling at a later time as to complaints lodged by laid-off Twitter employees who had not agreed to arbitration with the company, according to Bloomberg.

Lawyer still confident

Employment attorney Shannon Liss-Riordan told Bloomberg that despite initial appearances that Twitter prevailed in this instance, the company may live to regret its decision to challenge class action status.

Stating that she has pursued upwards of 500 arbitration claims for workers during her career to date, Liss-Riordan suggested that “insisting that workers file claims one by one has backfired for many companies our firm has taken on.”

“These companies think they can make employees just go away and not assert their rights by using arbitration clauses, but we have made them sorry about what they wished for,” the attorney continued.

Array of claims filed

Other former Twitter employees who attempted to go the class action route include two female workers who claim that the mass layoffs initiated by the company last year had an intentionally adverse and disproportionate impact on women, as The Hill noted at the time.

Plaintiffs Carolina Strifling and Willow Turkal contended that “the mass termination of employees at Twitter has impacted female employees to a much greater extent than male employees – and to a highly statistically significant degree.”

The women argued that the decisions regarding layoffs were made under “extremely hurried circumstances,” did not involve consideration of individual job performance, credentials, and experience, and constituted violations of the California Fair Employment and Housing Act and the federal Civil Rights Act of 1964.

Despite Donato's rejection of class action status for certain employees last week, Twitter's potential troubles are far from over, given that the company is still facing no fewer than three complaints with the National Labor Relations Board, as the Daily Mail notes, and precisely how those matters will ultimately be resolved is something that remains to be seen.