Legal Roundup: Brain Damage in Kids from Pesticides, Tesla’s SolarCity Scrutiny and More

The latest court filings and cases that will have an impact on the risk management and insurance industry.
By: | August 3, 2021

Tesla’s Acquisition of SolarCity Under Scrutiny

The Case: Seven shareholder lawsuits combined into one blame Elon Musk “for engineering Tesla’s 2016 acquisition of a financially precarious company called SolarCity that was marred by conflicts of interest and never generated the profits Musk insisted it would,” according to the Associated Press.

The Wall Street Journal added that “SolarCity was founded by Mr. Musk’s cousins, and Mr. Musk was its chairman and largest shareholder at the time. Plaintiffs, which include pension funds that owned Tesla stock, have characterized the deal as a scheme to benefit Mr. Musk and bail out a home-solar company on the verge of insolvency. The shareholders allege that Mr. Musk and Tesla didn’t accurately disclose during the deal process how close SolarCity was to running out of money.”

Scorecard: The case is underway in Delaware and has not reached a resolution.

Takeaway: A loss for Musk in this case could cost him more than $2 billion.

“However, in this case, known as a shareholder derivative action, the suit is filed by investors on behalf of a corporation, rather than the individuals or funds,” according to CNBC.

“If the plaintiffs win, proceeds may go to Tesla and not to the stakeholders who brought the suit,” CNBC added.

The larger question “is whether Musk acted in the best interests of Tesla’s shareholders or whether he was making and urging decisions that would primarily benefit himself, his family and other companies he was involved in, SolarCity and SpaceX.”

Withdrawn: Amazon Background Checks Case 

The Case: A proposed nationwide class action suit alleged that Amazon fired “a disproportionate number of Black and Latino drivers after conducting criminal background checks on them,” as reported in Reuters.

Scorecard: The case has been voluntarily dismissed.

Takeaway: In Boston federal court, a half dozen plaintiffs’ attorneys filed jointly with Amazon’s legal team to dismiss the claims. No word on a settlement. At the time of the filing, Amazon was just one of many businesses facing lawsuits related to background checks and race.

“Target Corp. in 2018 agreed to pay $3.7 million to settle similar claims in a proposed nationwide class action. The U.S. Census Bureau paid $15 million to settle similar race bias claims in 2016,” according to Reuters.

Chevron Defends Delivery Shortages During Texas Freeze

The Case:  Cailip, a natural gas marketer, filed suit against a unit of Chevron USA in the U.S. District Court for the Southern District of Texas, “asking for nearly $85 million from the oil giant for failing to make natural gas deliveries during a deep freeze across the state in February,” reports Reuters.

The Houston-based company “accuses Chevron Natural Gas of breaching a sales contract by delivering lower-than-agreed volumes of natural gas to a facility near Houston just as Winter Storm Uri knocked out power and sent natural-gas spot prices soaring.”

Scorecard: The case has recently been filed and has not reached a resolution.

Takeaway: To arrive at the $85 million ask, Cailip calculated “a sum equivalent to the difference between the natural gas’ contract price and its spot price for the undelivered gas. That calculation amounts to $84.5 million,” according to Reuters.

While there was no official word on the case from Chevron, Reuters points out that in the filing, Chevron blamed force majeure for missing and incomplete deliveries.

Brain Damage in Kids Linked to Pesticides Brings California Lawsuits

The Case: Lawsuits filed in four Central Valley, California counties “seek potential class-action damages from Dow Chemical and its successor company Corteva over a widely used bug killer linked to brain damage in children,” as reported by the Associated Press.

“Scientific studies have shown that chlorpyrifos damages the brains of fetuses and children. It was first used in 1965 but was banned for household use in 2001.”

Plaintiff’s attorneys claim that “at least 100,000 homes in the nation’s largest agricultural state may need to dispose of most of their belongings because they are contaminated with the pesticide,” according to the AP.

Scorecard: The case has recently been filed and has not reached a resolution.

Takeaway: The bug killer, known as Chlorpyrifos, is used on dozens of common crops.

The AP reports that “California banned sales of the pesticide last year and spraying of it this year. Some other states, including New York, have moved to ban it.”

The complaints were filed on behalf of residents of Fresno, Kings, Madera and Tulare counties as preparation for a future class action. &

Jared Shelly is a journalist based in Philadelphia. He can be reached at [email protected]

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