A federal judge on Friday gave the green light to a lawsuit against the social media company
In June, Mark Schobinger, a former Twitter executive compensation director who lives in Texas, sued the company, claiming breach of contract under California law. The company is headquartered in San Francisco.
Mr. Schobinger said that both before and after billionaire Elon Musk's purchase of Twitter last year, the company verbally promised employees 50 percent of their targeted 2022 bonuses if they stayed with the company in the first quarter of 2023. However, the bonuses were never paid, according to the lawsuit.
Mr. Schobinger filed the lawsuit on behalf of himself and nearly 2,000 other current and former employees. The amount in dispute is more than $5 million, according to court documents.
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 asserted a breach of contract claim” under California law.
Mr. Schobinger claimed that he was covered by the bonus plan and remained with the company until the last 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 only provided for a voluntary 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 actually receive a percentage of the annual bonus provided for in the plan if they remained with the company.”
The company argued that an oral promise was not a contract and that Texas law applied, but the judge concluded that California law applied in this case. But, the judge wrote, “Twitter’s arguments to the contrary all fail.”
The company could not be reached for comment on Sunday.
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 retained employees,” she said. “We can now move forward with the case that Twitter chose to dismiss – so it is not yet a decision on the merits.”