July 2022 Business Litigation Update
As we head into the heat of the summer, we’re taking a break from the usual format to highlight three very different cases that we hope our readers find interesting.
Following Layoffs, Tesla Sued by Workers Alleging Violations of WARN Act:
Elon Musk announced at the beginning of June that Tesla would cut about 10% of its salaried workforce. Recent reports indicate that cutting has begun. On June 19, 2022, some former employees who were laid off from Tesla’s Gigafactory 2 plant in Sparks, Nevada, filed a class-action lawsuit in federal court in Austin claiming that Tesla violated the Worker Adjustment and Retraining Notification (WARN) Act. The WARN Act requires employers to provide 60-day advance written notice of a mass lay-offs affecting 50 or more employees at a single site. The plaintiffs allege Tesla failed to give them the required 60-days’ notice even though more than 500 employees were terminated at the same facility.
Tesla hasn’t filed a response to the lawsuit but Musk stated it was “trivial.”
As more companies are announcing layoffs (e.g., Netflix, Redfin, Carvana to name a few), this case presents an opportunity to remind employers to ensure compliance with all laws and regulations and plan accordingly when considering any employment decisions.
Texas Supreme Court Strikes Down Defamation Judgment Against Memorial Hermann:
A $6.3M judgment against Memorial Hermann Health System was recently struck down by the Texas Supreme Court. The case involved a well-known Houston physician who claimed the hospital had engaged in a retaliatory “whisper campaign” against him after he chose to leave for a rival. He alleged the hospital used incorrect data on patient mortality rates to harm his reputation and his medical practice.
At trial, the jury found the hospital liable for defamation, awarding more than $6.3M in damages. The Houston court of appeals affirmed. However, the Texas Supreme Court determined there was insufficient evidence to support the jury’s damages award. Specifically, the Court held that there was no evidence the allegedly defamatory statements caused any injury. This case highlights the difficulty a plaintiff faces in Texas when trying to prove reputational harm, particularly when the statements are related to the work-place.
NY Court Rules an Elephant is Not, in Fact, a Person:
An elephant named Happy has lived a long life at the Bronx Zoo, but in 2018 an organization fighting for animal rights filed a lawsuit in New York state court seeking to have Happy found to be “a legal person” with the same protections against unlawful imprisonment as humans (i.e., the right to habeas corpus). The organization claimed that Happy is an “extraordinarily cognitively complex and autonomous nonhuman” animal, with the capacity for self-awareness, long-term memory, and intentional communication. Ironically, the organization wasn’t seeking Happy’s freedom, only that she be transferred from the Zoo to an elephant sanctuary where she would have more room to roam.
After a long legal battle, New York’s highest court recently ruled in a 5-2 decision on June 14 that Happy cannot be considered a person and therefore is not illegally being held at the Bronx Zoo. While the impact of this ruling on business disputes is limited, some commentators have noted that the arguments regarding Happy’s “person hood” might someday be applicable to artificial intelligence (AI) systems. For example, a few days before the NY court issued its ruling in Happy’s case, a Google engineer went public with claims that an AI language model he was working on – called LaMDA – had become “self-aware.” As businesses increasingly develop and implement powerful AI programs, will there be a lawsuit at some point in the future to grant liberty to an AI system?