Musk's Twitter Layoffs Cause thousands of legal headaches - Bloomberg Law

Twitter Inc.

Legal battles involving the company’s mass layoffs of the last autumn are growing and two former employees who filed class action lawsuits and more than 2,000 former employees seeking claims in arbitration for themselves.

The social media firm controlled by Elon Musk’s newly formed X Corp. faces challenges both in and out of court, as the majority but not all of its former employees have signed contracts for binding arbitration. Twitter included the agreements in the package of documents handed out to job seekers who were offered a job.

The results of those legal disputes will test Twitter’s plan for handling the aftermath of the sudden and massive cuts to its workforce, and particularly the management of severance packages for employees.

Musk dismissed about half of Twitter’s workforce in November in the wake of his $44 billion purchase from the firm. In 2023, the layoffs lasted for a while and reportedly brought the total number of employees to less than 22,000.

The layoffs and ensuing legal action are a one aspect of the chaos that has infiltrated Twitter since Musk was appointed in October. The company has also rolled back its extensive employee telework policy. It has and asked employees to sign a commitment to remain on an “extremely extreme” Twitter, or to leave and also removed blue verification checks from accounts of users unless they are willing to pay for them.

Prominent plaintiffs’ lawyer Shannon Liss-Riordan from Lichten & Liss-Riordan PC is the first to take on Musk-owned Twitter and filed an action on the eve of the major November layoff, claiming that the company did not give the legally-required notices prior to the mass termination.

Even though Twitter has pushed the matter out of court Liss-Riordan continued to file lawsuits. She filed two class action lawsuits this month which brings her total number of court cases pending against Twitter to eight.

Liss-Riordan also said that her company represents around 1,700 former Twitter employees in a massive arbitration campaign against the company.

“It requires much more difficult as compared to traditional classes actions” she said about the approach of mass arbitration.

Liss-Riordan has fifteen years of experience in launching large-scale arbitration initiatives when clients are shut out of the courtroom, manning up and gaining expertise as she campaigns against trucking firms and gig economy companies strip clubs, trucking companies and many other businesses she explained.

And Lissa-Riordan’s not alone in the aforementioned way of targeting Twitter by filing mass arbitration lawsuits.

Outten & Golden LLP; Kamerman, Uncyk, Soniker & Klein PC and The Bloom Firm PC each represent groups of around 100 former employees seeking private arbitration against companies, as per lawyers at these firms.

An auto-response email sent from the Twitter press contact emails sent an emoji with a poop image when asked to clarification on the allegations made concerning the business.

Tailored Claims

The allegations that former Twitter workers filed in arbitration are similar to those involved in lawsuits.

The alleged bait-and-switch feature of Twitter’s compensation package for severance is a key subject of numerous arbitration cases, resulting in allegations that it violated contract rights, violation in the contract of fair and honest dealing fraud, unfair competition According to the lawyers representing former Twitter employees.

The former employees claim Twitter violated its commitment to offer severance benefits that were at least as good than those offered prior to the time that Musk bought the company. In one suit, Twitter pledged to pay the lump sum amount which included at minimum two months’ wages and a pro-rated bonus the cash value of equity which was vested three months following the date of separation, as well as the money needed to maintain health insurance coverage.

Instead, they claim they were only offered one month’s pay in exchange for full waiver of any legal claim.

In contrast to class action lawsuits which demand the same allegations as the class or subgroups in a group, the claims in arbitration may be tailored to each plaintiff.

According to the employee and the arbitration claim, current claims for arbitration against Twitter could result in discrimination on the basis of race, age, or others protected traits; reprisals against taking a leave, failure to pay expenses or the wages in full as well as violations in the Worker Adjustment and Retraining Notification Act that requires a specific amount of time before any mass layoffs, lawyers have said.

Settlement Leverage

A few of the companies representing former Twitter employees regularly work with each other to deal with the adversity of work created by mass-arbitration campaigns.

Legal counsel Jahan Sagafi said his team at Outten & Golden has been working on Twitter arbitrations with lawyers at Kamerman Uncyk and Rudy Exelrod Zieff & Lowe LLP.

“A large portion of plaintiffs’ lawyers appreciate collaboration and community,” he said. “It’s an win-win situation for both the clients as well as the lawyers.”

While mass arbitrations can be more difficult than group actions, the expense to companies – who are typically required to pay for arbitration – gives plaintiffs some of the leverage that settlements might get by filing a lawsuit as a class. Each arbitration could cost hundreds of thousands of dollars in costs.

Uber Technologies Inc., for instance it paid at least one hundred thousand dollars to settle most of the 60,000+ arbitration claims involving driver’s claims of misclassification as employees.

Mass arbitrations can also be more costly to resolve as compared to class actions, according Amy Schmitz, a law professor at Ohio State University who’s written extensively about arbitration.

An arbitration process takes a lot more time and focus from an individual plaintiff than a group action, Schmitz explained. So, plaintiffs committed to an arbitration process are usually “squeaky wheels” who wish to participate and heard instead of doing it to earn money, she added.

“Dragging its Feet”

Twitter has so far responded by stepping back from through the process of arbitration, as per lawyers representing former employees of the company.

“We are irritated with the way Twitter has been slow at each step of the way,” said Lisa Bloom of the Bloom Firm. “They’re simply doing things in the quickest way possible. It’s a typical, but annoying strategy.”

The company has been putting off paying its invoices and selecting arbitrators. The company has been requesting its former employees to provide the arbitration agreements they signed the plaintiffs’ lawyers claimed.

Even though arbitrators have the right to extend the process but they are not able to extend the proceedings. Federal Arbitration Act provides a route back to the court in the event that the delay is at an extent at which the defendant has effectively abstained from arbitrate.

The US Supreme Court made it simpler to prove an exemption by deciding in 2022 Morgan V. Sundance, which said the party does not have to prove they were disadvantaged due to their opponent’s actions in order to get the arbitration process out of the way.

Liss-Riordan says she’s ready to contact Twitter for delays that go beyond a certain point however, the company’s behavior has been similar to other companies that are facing mass arbitration. The cases are in initial stages, but there’s lots of action in the near future, she said.

“I anticipate taking down Musk,” Liss-Riordan said. “I am looking forward to deposing him 1700 times, should it be necessary.”