Wednesday, May 22, 2024

A federal judge on Friday gave the go-ahead to a lawsuit against the social media company X, formerly known as Twitter, in which workers claim that the company promised but never paid millions of dollars in bonuses.

In June, Mark Schobinger, a former senior director of compensation for Twitter who lives in Texas, sued the company, claiming breach of contract under California law. The company has its headquarters in San Francisco.

Mr. Schobinger said that both before and after the billionaire Elon Musk bought Twitter last year, the company had orally promised employees 50 percent of their 2022 targeted bonuses if they stayed with the company in the first quarter of 2023. However, the bonuses were never paid, according to the suit.

Mr. Schobinger filed the suit on his own behalf and on behalf of nearly 2,000 other current and former workers. The amount in dispute is greater than $5 million, according to court records.

In a three-page opinion denying the company’s motion to dismiss the case, Judge Vince Chhabria of the U.S. District Court for the Northern District of California ruled that Mr. Schobinger had “plausibly stated a breach of contract claim” under California law.

Mr. Schobinger maintained that he was covered by the bonus plan and that he had stayed with the company through the final possible payout date.

“Once Schobinger did what Twitter asked, Twitter’s offer to pay him a bonus in return became a binding contract under California law,” the judge wrote. “And by allegedly refusing to pay Schobinger his promised bonus, Twitter violated that contract.”

Lawyers for the company had argued that the performance bonus plan was “not an enforceable contract, because it provides only for a discretionary bonus,” the ruling said.

The judge wrote that Mr. Schobinger was not suing to enforce the discretionary bonus plan but “to enforce Twitter’s alleged subsequent oral promise that employees would, in fact, receive a percentage of the annual bonus contemplated by the plan if they stayed with the company.”

The company argued that an oral promise was not a contract and that Texas law should apply, but the judge found that California law governed the case. But, the judge wrote, “Twitter’s contrary arguments all fail.”

The company could not be reached on Sunday for comment.

In a statement, Mr. Schobinger’s lawyer, Shannon Liss-Riordan, said she was pleased with the judge’s decision.

“The court denied Twitter’s motion to dismiss our claim that Twitter failed to pay promised bonuses to continuing employees,” she said. “We can now go forward with the case, which Twitter was trying to throw out — so it’s not yet a ruling on the merits.”

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