Elon Musk Loses Bid to Dismiss Ex-Twitter CEO Parag Agrawal’s Severance Lawsuit

In a significant legal blow for Elon Musk, a U.S. judge has ruled that former Twitter CEO Parag Agrawal and other top executives can move forward with their lawsuit against Musk over unpaid severance. The case revolves around Musk’s alleged attempt to avoid paying severance by terminating executives as he completed his $44 billion acquisition of Twitter, now rebranded as X Corp, in 2022.

The ex-Twitter executives, including Agrawal, former CFO Ned Segal, policy head Vijaya Gadde, and general counsel Sean Edgett, filed the complaint in March. They claim that Musk’s rush to finalize the deal was aimed at cutting off their severance benefits. The complaint references a statement in Walter Isaacson's biography of Musk, where Musk reportedly hinted at a $200-million cost difference if he closed the deal that night rather than the next morning.

U.S. District Judge Maxine Chesney dismissed Musk’s argument to throw out the case, allowing the lawsuit to continue. The plaintiffs allege they are entitled to severance equal to one year’s salary plus stock awards based on the acquisition price.

The ruling is the latest setback in Musk's legal battle over severance payments. Since taking over Twitter, Musk has faced multiple claims for unpaid compensation, including ongoing litigation over $500 million in severance for roughly 6,000 employees laid off after the acquisition. While Musk previously won a lawsuit in July that contested obligations under federal retirement law, at least one former employee was recently awarded severance through arbitration, a decision that may set a precedent for similar cases.

The case, Agrawal v. Musk, continues in the U.S. District Court, Northern District of California.