The parties in a $500 million proposed class action lawsuit over unpaid severance—including terminated Twitter employees, X Corp. (the company formerly known as Twitter), and owner Elon Musk—have reached an impasse in settlement negotiations. Currently, law firms for individual plaintiffs — Lichten & Liss-Riordan PC and Sanford Heisler Sharp McKnight LLP — are arguing in court over how to proceed, with Sanford Heisler filing a motion to withdraw as counsel for named plaintiffs Courtney McMillian and Ronald Cooper after they retained Lichten in October.
McMillian and Cooper filed suit on behalf of certain former Twitter employees in July 2023. A year later, McMillian and Cooper appealed to the U.S. Court of Appeals for the Ninth Circuit after a California federal district court judge dismissed their claim against X and Musk for allegedly violating the Employee Retirement Income Security Act (ERISA) by not paying them severance.
In August, Sanford Heisler, which was solely representing the plaintiffs at the time, reported a tentative settlement to the Ninth Circuit. That court is now considering a motion to intervene in the appeal filed by Sanford Heisler in October, who represents members of the proposed class other than McMillian and Cooper, who no longer wish to represent the class. Still, the appellate court has asked for input by the other partes as to whether deferring the withdrawal motion would prejudice or slow down McMillian and Cooper’s claims.
McMillian and Cooper have taken the position that there is no reason for the court to delay consideration of Sanford Heisler’s withdrawal motion because they have retained a new law firm, are proceeding individually, and have not reached a settlement with X and Musk. In fact, the duo also is seeking additional relief from the Ninth Circuit to quash rumors of a $500 million settlement, pointing to misinformation in the press and concerns about confusion for putative class members.
In contrast, Sanford Heisler claims that the federal district court should hold its motion to withdraw in abeyance until the Ninth Circuit rules on the motion to intervene. According to Sanford Heisler, taking this approach will allow the court to determine whether granting the withdrawals will prejudice putative class members and cause minimal delay.
The district court case is McMillian et al. v. Musk et al., Case Number 3:23-cv-03461, U.S. District Court for the Northern District of California. The appeal is McMillian et al. v. Musk et al., Case Number 24-5045, U.S. Court of Appeals for the Ninth Circuit.
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