Elon Musk has successfully defended himself against a legal action accusing him of failing to honor severance obligations estimated at over $500 million for a large number of Twitter employees that were terminated in mass layoffs post his acquisition of the social media platform now known as X.

Judge Trina Thompson in San Francisco, California ruled that the Employee Retirement Income Security Act (ERISA) at the federal level, which manages benefit plans, did not encompass the claims made by the former employees, hence leading to a lack of jurisdiction on her part.

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The lawsuit is among many others pointing fingers at Musk for not upholding commitments made to former Twitter employees, which includes the prior Chief Executive Parag Agrawal, following the company's acquisition for $44 billion in October 2022.

Besides being at the helm of the electric vehicle manufacturer Tesla, Musk ranks as the wealthiest individual globally according to Forbes magazine.

A spokeswoman representing the ex-employees on behalf of Sanford Heisler Sharp expressed disappointment over the ruling and mentioned that legal actions are being assessed. Neither Musk's nor X's attorneys responded immediately to Reuters' requests for comments.

As per the complaint, Twitter's severance strategy entailed employees staying after the acquisition receiving between two to six months' pay plus an additional week's pay for each year of service if they were laid off.

Plaintiffs Courtney McMillian, who oversaw Twitter's compensation and benefits, and Ronald Cooper, an operations manager, alleged that instead of the promised benefits, Twitter only offered fired employees a one-month pay as severance with no further benefits.

Thompson clarified that ERISA did not apply to Twitter's post-acquisition scheme since there was no ongoing administrative structure for reviewing claims case-by-case or offering perks like continued health insurance and placement services.

She noted, "There were solely cash payments pledged."

Employees dismissed during Twitter's mass layoffs in 2022 and 2023 may amend their claims, excluding those governed by ERISA, as stated by the judge.

Referred to as McMillian et al v Musk et al, the lawsuit is being heard in the US District Court, Northern District of California, under the docket number 23-03461.