Fired by Musk: Former Twitter Executive Sues X Corp for Unpaid Severance.

In October 2022, Elon Musk acquired Twitter for $44 billion, which, among other things, led to a massive and controversial overhaul of its employees. One of these employees was Leslie Berland, Twitter’s chief marketing officer. During a company meeting with advertisers, Musk went off script, mentioning his plan to reinstate Donald Trump's banned account. A global client officer, who was there on Berland’s recommendation, advised against this, which left Musk “embarrassed and angry.” Musk later messaged Berland, stating she gave a “bad recommendation,” and hours later, fired both of them. Berland is currently suing X over its failure to pay her $20 million in severance. X denies it has a responsibility to pay Berland severance due to the nature of the firing [1].

Musk and Berland contest whether the firing was with or without cause. When someone is fired with cause, the termination must be based on misconduct, poor performance, or some violation of company policy. With-cause terminations are not typically entitled to severance. Firings without cause, on the other hand, have nothing to do with employee performance. Berland claims her termination, despite the company's claims, was without cause, and she is owed severance pay as per her contract with X [2]. Berland argues that the nature of her firing, only hours after Musk was embarrassed at a meeting, was “petty retribution” that did not meet the requirements for cause.

X waited 26 days after her dismissal to send Berland a letter informing her she had been fired for cause, which her lawyers claim was an effort to avoid paying her benefits. On the other hand, X claims her termination was based on prior mismanagement before Musk acquired Twitter. X also claims that she once traveled by charter plane to assist Musk, which was a violation of company policy. Misconduct and a violation of company policy would both justify a proper firing without severance pay according to her contract.

To prove this termination was without cause, Berland must demonstrate her firing was not based on any legitimate cause like misconduct [3]. The timing of her termination, immediately following an embarrassing meeting with Musk, is an indication this was an act of heated retaliation. The fact X waited almost a month to inform her also suggests an attempt to avoid their severance obligations, rather than a genuine explanation.

X would need to prove consistent past misconduct to support their claims. Any claim regarding poor performance like this would be hard to prove. Berland has been listed as a Forbes’ Most Influential CMO, and in 2022, inducted into the CMO Hall of Fame. Berland was apparently a “trusted face for advertisers” according to Lau Paskalis, President and COO of MMA Global, a marketing association. Paskalis also stated Berland’s departure was likely a “death knell for the platform’s viability as an ad-supported platform in the near term.” Musk’s claim that Berland was underperforming would have to face the fact she was an industry leader and closely trusted by X’s advertisers.

If Berland had, in fact, chartered a plane in violation of X’s policy, it could be used as a legitimate reason for firing her. However, the timing of the event and a lack of prior warning could be used to discount this claim. In a similar case, Gallo vs. JPC, Inc., employee Carol Gallo successfully argued her termination was invalid due to the enforcement of the supposed infractions [4]. Gallo had to take medical leave, which, while violating company policy, was tolerated by other employees and was enforced discriminatorily against the plaintiff. Theoretically, a history of selective or infrequent enforcement of this policy would cast doubt on X’s justification. Even if X could prove she violated company policy, the nature of the firing and the clear underlying motivation could counteract this piece of evidence.

This situation is not new to X; multiple former employees have filed lawsuits against Musk and the company challenging their own terminations. Six thousand former employees are in the process of appealing their case, worth $500 million, to the U.S. Court of Appeals. Former CEO Parag Agrawal, along with three other senior officials, has also filed lawsuits against Musk over their severance payments. In total, the four are asking for $128 million. X is all too familiar with lawsuits just like this, and only time will tell how Berland v. X Corp. will go. X has won several cases regarding their firing practices, such as the previously mentioned case involving 6,000 employees, which was dismissed and is currently in the appeals process. X has also lost several cases, recently involving an employee in Ireland being awarded roughly $600,000 for wrongful termination. Many of the suits against X right now are too early to tell where they might land, but the number of them should be alarming to Musk.

Sources:

1. Ex-Twitter Marketing Officer Sues X Corp. for Severance, Bloomberg Law (Nov. 10, 2024).
2. Berland v. X Corp., No. 3:24-cv-07589 (n.d).
3. Practical Law, For-Cause Employment, Thomson Reuters (2024).
4. Gallo v. John Powell Chevrolet, Inc., 981 F.2d 1246 (3d Cir. 1992).