Schobinger v. Twitter, Inc.

Background

Mark Schobinger was Twitter’s Senior Director of Compensation during the 2022–23 period, when Twitter was being acquired by Elon Musk. He was part of a group of employees eligible for an annual bonus payable in early 2023. The bonus plan made payment discretionary, but Schobinger alleged that Twitter promised employees in April, May, and August 2022 that they would receive the bonus if they stayed through the acquisition. He alleged that he relied on that promise, stayed through the acquisition, and did not receive the bonus.

Schobinger moved to certify a class consisting of employees in the bonus pool. Class certification is the court’s decision that a case may proceed on behalf of a group of similarly situated people rather than only the named plaintiff.

Reasons for Denying Class Certification

The court focused on Schobinger’s adequacy and typicality as a proposed class representative. Adequacy asks whether the named plaintiff can fairly and vigorously represent the class. Typicality asks whether the named plaintiff’s claims arise from circumstances sufficiently similar to those of the proposed class members.

Discovery showed that, in November 2022, Schobinger told Twitter’s Head of People Experience that payment of the bonus was within Elon Musk’s discretion and that he had recommended not paying it. In February 2023, he sent Twitter executives a white paper stating that exercising discretion not to pay the bonus would be prudent. The court also noted evidence that Schobinger told Musk directly in January 2023 that Twitter should not pay the bonus.

The court concluded that Schobinger’s conduct made him an inadequate and atypical representative of employees claiming that Twitter wrongfully withheld the bonus. The court stated that Schobinger’s explanation for believing he was entitled to the bonus while advocating that Twitter not pay it seemed likely to be untrue. But the court said that even if his explanation were truthful, his conduct would still make him unsuitable to represent the other employees.

The court rejected Schobinger’s argument that Twitter’s defenses of unclean hands and estoppel applied to the entire proposed class. It found no indication that facts supported those defenses against the other employees or that the defenses would be as strong against them as they were against Schobinger.

Other Problems Identified by the Court

The court also cited several additional problems with the class-certification motion. A large number of proposed class members had signed arbitration agreements, and at least some agreements contained class-action waivers. The court stated that Texas law, rather than California law, applied to Schobinger’s claims. It also identified choice-of-law concerns with seeking to certify a nationwide class under California law.

At the hearing, Schobinger’s lawyer asked to substitute another plaintiff as class representative. The court denied that request for several reasons, including its conclusion that counsel’s decision to seek class certification despite the discovery evidence showed that she was unqualified to serve as class counsel.

Rulings and Case Status

The court denied the motion for class certification. It denied Schobinger’s request to substitute a different class representative. It also denied Twitter’s administrative motion for leave to file a sur-reply. The court found that notice to prospective class members that class certification had been denied was unnecessary. Finally, it set a case management conference for October 25, 2024, to establish a schedule for summary judgment and trial.