Former Senior Director of Compensation at Elon Musk’s company, X, Mark Schobinger, filed a lawsuit in June against the now-renamed X Corp, accusing the social media platform (previously known as Twitter) of breaching contracts by failing to fulfill promised bonuses to its employees. A federal judge, ruling on Friday, found that the company violated agreements by not disbursing millions of dollars in bonuses, as pledged.
Schobinger’s legal action asserted that following Elon Musk’s acquisition of X last year, the company assured its employees of receiving 50% of their 2022 target bonuses. However, despite employees fulfilling their obligations, the promised payments were never made, leading to the breach of contract claim under California law.
US District Judge Vince Chhabria rejected X’s attempt to dismiss the case, stating that Schobinger had convincingly presented a valid claim under California law and was entitled to the bonus outlined in the company’s plan. The judge emphasized that by not fulfilling the promised bonus, X violated the established contract.
Despite X’s lack of a media relations office and its silence on the matter outside business hours, the company did not provide an immediate comment regarding the ruling or the situation with Mark Schobinger’s lawsuit.
X’s legal defense contended that the oral promise made wasn’t legally binding as a contract and argued for the application of Texas law in the case. However, Judge Chhabria ruled that California law governed the dispute, dismissing X’s counterarguments.
Since Elon Musk’s acquisition and subsequent reduction of more than half of X’s workforce, the company has faced multiple legal challenges from former employees and executives. Allegations range from age and gender discrimination to claims of inadequate notification regarding mass layoffs. Despite these legal battles, the company maintains its denial of any wrongdoing.