SoylentNews

Arthur T Knackerbracket [soylentnews.org] writes:

--- --- --- --- Entire Story Below - Must Be Edited --- --- --- --- --- --- ---

Arthur T Knackerbracket has processed the following story [arstechnica.com]:

Elon Musk's X Corp. has to pay $1.1 million in reimbursements for legal fees to former Twitter executives that he fired, including ex-CEO Parag Agrawal, a judge reportedly ruled yesterday. Delaware Court of Chancery Judge Kathaleen McCormick ruled against Musk's firm during a hearing yesterday, Bloomberg reported [bloomberg.com].

The former Twitter executives said that after being fired by Musk, the company now known as X refused to reimburse them for expenses related to federal investigations and civil lawsuits. The former executives' lawsuit filed [arstechnica.com] in April said the company "has breached its obligations... by refusing to advance Plaintiffs' Expenses."

"After hearing arguments, McCormick noted Delaware courts lean in favor of granting executives' request to have legal fees covered when tied to their actions on behalf of companies. She said she didn't see any reason to deviate from the norm in the case," Bloomberg wrote.

McCormick is the same judge who handled the trial [arstechnica.com] that forced Musk to complete the deal to buy Twitter that he tried to break [arstechnica.com] last year. "I have reviewed the amount in question, and although it is high and probably higher than most humans would like to pay, it's not unreasonable," McCormick was quoted as saying yesterday. A written ruling wasn't available on the court website yet.

The lawsuit was filed by Agrawal, former Chief Legal Officer Vijaya Gadde, and former Chief Financial Officer Ned Segal. Musk fired the executives right after he completed the $44 billion purchase of Twitter in October 2022.

Their lawsuit said that Twitter's bylaws and agreements with executives required it "to indemnify Plaintiffs and advance all Expenses incurred in connection with any Proceeding in which Plaintiffs are involved by reason of their Corporate Status." The plaintiffs said they incurred legal bills related to inquiries by the US Securities and Exchange Commission Division of Enforcement and US Department of Justice; a securities class action [courtlistener.com] filed against the company and its executives; a congressional inquiry into alleged "social media bias"; and other matters.

"Despite timely written demand along with documentation from Plaintiffs through their counsel, the Company has not advanced to Plaintiffs their Expenses actually and reasonably incurred related to the various Proceedings," the lawsuit said. "Over two months after Plaintiffs' initial written demand, the Company offered only a cursory acknowledgment of receipt, but still refused to acknowledge its obligations and to remit payment of any invoices."

According to Bloomberg, X "has paid about $600,000 of what it owes, but has withheld $1,158,427 in fees for lawyers' work representing the former top managers." An X lawyer argued that fees related to Gadde's testimony in front of Congress were too high, the Bloomberg story said:

Michael Blanchard, one of the company's lawyers, said X officials got "sticker shock" when they got the bill from Gadde's lawyers, which they found to be "quite excessive." Blanchard said the fees weren't for litigation "that's going to go for several years," but instead were for "one day of testimony." X officials considered the request a "clear abuse" of the firm's legal duty to indemnify executives for work on behalf of the company.

David Anderson, a lawyer for the former Twitter executives, countered [that] X officials wrongfully suggested Gadde had run up excessive fees as revenge for being forced out of the company. The case boiled down to "ongoing delays" in paying legal fees that were mandated under Agrawal's and Gadde's employment contracts, he added.

The lawsuit said that Gadde's legal expenses were for "corresponding with Congressional Committee staff; researching legal obligations surrounding Congressional testimony; researching facts and legal theories related to the subject of the inquiry; reviewing documents within the scope of the inquiry; preparing and editing hearing preparation materials; managing compliance with Congressional schedules and rules for hearings; and preparing for testimony."

The House Oversight Committee hearing that Gadde testified at was titled [house.gov] "Protecting Speech from Government Interference and Social Media Bias, Part 1: Twitter's Role in Suppressing the Biden Laptop Story."

In addition to payment for previous expenses, the former Twitter executives' lawsuit sought reimbursement for expenses incurred while suing to get reimbursement for those earlier expenses. They also sought an order "declaring that Plaintiffs are entitled to advancement of any future attorneys' fees, costs, and expenses incurred in connection with the [ongoing legal] Proceedings."

Musk's refusal to pay bills has been a theme in many lawsuits against the social network company. Over two dozen lawsuits alleged that he refused to pay money owed to vendors and landlords that started providing services to Twitter before Musk bought the firm. Some of the plaintiffs in those cases have obtained payment via settlement—our recent feature [arstechnica.com] on the unpaid-bill lawsuits describes the cases in detail.

While the fired executives are on track to get their reimbursements, laid-off employees who sued the company are still trying to get allegedly unpaid severance. Musk was able to force employees into arbitration but was then sued for refusing to pay [arstechnica.com] arbitration fees. A settlement to end the cases may be in the works, as X Corp. reportedly agreed to settlement talks [arstechnica.com] on arbitration claims from about 2,000 former employees.

Original Submission