A U.S. appeals court ruled Tuesday that X Corp cannot be forced to pay upfront arbitration fees for former employees who lost their jobs after Elon Musk acquired the company, formerly known as Twitter.
The 2nd U.S. Circuit Court of Appeals in New York said an arbitration firm must decide whether X should cover the fees or split them with the seven former workers who claimed the company was trying to derail their cases, News.Az reports, citing Reuters.
Circuit Judge Gerard Lynch wrote that arbitration’s goals—efficient dispute resolution and avoiding long, costly litigation—would not be served by court intervention in procedural fee disputes.
After Musk’s 2022 acquisition, around 6,000 employees were fired, leading to multiple lawsuits over terminations and severance pay. X last month settled one California case involving $500 million in claimed severance.
Most Twitter employees had agreed to arbitration through the private firm JAMS, which normally requires employers to pay initial fees of about $1,500. X refused, arguing employees could opt out of arbitration at the time of hiring.
The appeals court reversed a Manhattan federal judge’s decision in favor of the workers, ruling that procedural disputes under the arbitration agreements fall under JAMS jurisdiction, not federal courts.
