Schobinger v. Twitter, Inc.

Background

Mark Schobinger sued Twitter, Inc., and other defendants over an alleged unpaid bonus. He alleged that Twitter orally promised to pay each employee covered by its 2022 Performance Bonus Plan a portion of the contemplated annual bonus if the employee remained with the company through the first quarter of 2023. Schobinger alleged that he was covered by the plan, stayed through the final possible payout date, and never received a bonus.

The court granted Twitter’s request to consider the 2022 Performance Bonus Plan because the complaint referred to it extensively. The court ruled that California law governed whether Twitter’s alleged oral statements created a valid and enforceable contract. Twitter argued that Texas law should apply, but the court concluded that the cited California choice-of-law provision addressed contract interpretation, not contract validity or enforceability, and that Twitter had not argued for applying Texas law under California’s governmental-interest approach.

Breach-of-contract claim

The court held that Schobinger plausibly stated a breach-of-contract claim. It reasoned that, as alleged, Twitter made an offer to pay a bonus in exchange for employees’ satisfying stated conditions, and that Schobinger’s alleged performance of those conditions could have turned the offer into a binding contract under California law. The alleged failure to pay the promised bonus therefore supported the claim.

The court rejected Twitter’s argument that the 2022 Performance Bonus Plan was not enforceable because it provided only for a discretionary bonus. According to the court, Schobinger was not suing to enforce the discretionary plan itself; he was suing to enforce an alleged later oral promise that employees would receive a percentage of the annual bonus if they stayed with the company. The court also rejected Twitter’s arguments concerning oral modifications of written contracts and the parol evidence rule. It explained that the oral-modification rules apply only when a valid, enforceable written contract already exists, and that the parol evidence rule does not exclude evidence of oral agreements made after a fully integrated written agreement was executed.

Promissory-estoppel claim

Promissory estoppel is a claim based on a person’s reliance on a promise rather than on an enforceable contract. The court said a plaintiff may plead both breach of contract and promissory estoppel based on the same alleged broken promise, pursuing them as alternatives. But under the court’s reading of controlling precedent, the plaintiff must also plead that the alleged contract may be invalid or unenforceable. Because Schobinger had not alleged why he might be unable to recover on the breach-of-contract claim, the court dismissed the promissory-estoppel claim with leave to amend.

Disposition and next steps

The court denied the motion to dismiss as to the breach-of-contract claim. It granted the motion to dismiss with leave to amend as to the promissory-estoppel claim. Any amended complaint was due within 21 days of the ruling, and Twitter’s response was due within 14 days after service. Discovery on the breach-of-contract claim could proceed immediately; if Schobinger filed an amended promissory-estoppel claim, discovery on that claim could also proceed immediately.