Tesla ordered by judge to turn over documents related to Elon Musk’s $55 billion compensation plan

Elon Musk
  • A judge on Monday ordered Tesla to turn over documents concerning Elon Musk’s compensation plan.
  • Shareholders sued Tesla in 2018, arguing its board wronged investors by awarding Musk such a lucrative package.
  • The judge told Tesla to turn over communications between Musk and its top lawyers ahead of the board’s approval of the plan.
  • See more stories on Insider’s business page.

A Delaware judge on Monday ordered lawyers representing Tesla’s board of directors to turn over certain communications that CEO Elon Musk may have shared with the company’s top in-house attorneys before the board approved a compensation plan in 2018 that could net Musk more than $50 billion.

The ruling by Vice Chancellor Joseph Slights Jr. came in response to a motion to compel filed on behalf of shareholders who have accused Musk and Tesla’s board of directors of breaching their fiduciary duties to the company and its stockholders, granting unjust enrichment to Musk and wasting corporate assets.

While granting the plaintiffs access to certain documents that Musk either sent or received, Slights denied access to a broader range of other documents that defense attorneys have argued are similarly protected by attorney-client privilege.

Slights said documents that Musk shared with Tesla general counsel Todd Maron or deputy general counsel Jonathan Chang before the board signed off on the compensation plan should be provided to the shareholder plaintiffs.

The plaintiffs have argued that Chang and Maron, who was Musk’s former divorce attorney, worked to advance Musk’s interests and negotiated on his behalf against the board’s compensation committee.

“Leveraging his control, close personal relationships, and reputation for retribution, Musk co-opted Maron and Chang to help him structure the plan free from committee involvement,” plaintiffs’ attorneys wrote in asking Slights to force the company to turn over documents.

“Musk and his agents handed the committee a fully-baked plan,” they added.

While Slights agreed that communications directly involving Musk should be disclosed, he refused to order defense attorneys to turn over other communications among board members, Chang and Maron, and an outside law firm.

The judge said there was no basis for him to order the production of documents that may be protected by attorney-client privilege when the information might be available from other sources. He noted that Musk, Maron, Chang and compensation committee chair Ira Ehrenpreis have yet to be deposed in the case.

The plaintiffs argued in their motion to compel that Tesla was improperly shielding hundreds of documents that Maron or Chang shared with the compensation committee and its advisers.

Attorney Gregory Varallo told Slights on Monday that the plaintiffs in the lawsuit, which was filed in 2018, still don’t have an answer to a simple question: “Whose idea was the largest compensation plan ever designed?”

“If you read the record to date, no one seems to know,” said Varallo.

“There was quite a lot of sausage-making taking place before this was even a twinkle in the eye of the compensation committee,” he added.

Vanessa Lavely, an attorney representing the Tesla directors, told Slights that the board followed “a robust process” to develop and approve the compensation plan.

“There was absolutely no rubber-stamping here, and the defendants look forward to the opportunity to present this record to the court,” she said.

In 2019, Slights refused to dismiss the breach-of-duty claims against Musk and Tesla directors, and an unjust enrichment claim against Musk.

Under Delaware’s “business judgment” rule, courts typically give strong deference to a corporate board’s decision-making unless there is evidence that directors had conflicts or acted in bad faith. If a plaintiff is able to overcome the business judgment rule’s presumption, the board’s action is then subject to an “entire fairness” analysis, which shifts the burden to the corporation to show that the deal involved both fair dealing and fair price.

Slights said that because the plaintiffs had adequately pleaded that Musk was a controlling shareholder and had a conflict of interest, the case lent itself to “heightened judicial suspicion.”

Under the plan, Musk stands to reap billions if the electric car and solar panel maker hits ambitious market capitalization and operational milestones. For each of 12 milestones the company achieves, Musk, who already owned more than 20% of Tesla when the plan was approved, would get stock equal to 1% of outstanding shares at the time of the grant.

Each milestone includes growing Tesla’s market capitalization by $50 billion and meeting aggressive revenue and pretax profit growth targets. Musk would receive the full benefit of the pay plan, $55.8 billion, only if he leads Tesla to a market capitalization of $650 billion and unprecedented revenues and earnings within a decade.

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MyPillow CEO Mike Lindell claimed in a lawsuit against the Daily Mail that churches are disassociating with him because the tabloid reported he had a secret romance with Jane Krakowski

lindell krakowski mypillow
  • The Daily Mail reported in January that Mike Lindell had a “secret nine month romance” with Jane Krakowski.
  • Both Lindell and Krakowski denied the alleged relationship in the report. Lindell later sued the British tabloid for defamation.
  • He revised the lawsuit Tuesday to add that his nonprofit’s relationships with churches has been impacted as a result of the report.
  • See more stories on Insider’s business page.

MyPillow CEO Mike Lindell revised his lawsuit against the Daily Mail Tuesday, adding a claim that churches are disassociating with him because of the British tabloid’s claims about an alleged romance with actress Jane Krakowski.

The Daily Mail published a report in late January 2021 claiming that the MyPillow founder had a “secret nine-month romance” with the “30 Rock” star. Both Lindell and Krakowski denied the report.

“Jane has never met Mr. Lindell. She is not and has never been in any relationship with him, romantic or otherwise,” a publicist for Krakowski said in a statement at the time. Lindell said he had “never even heard” of the actress before.

In the week after the report was published, Lindell filed a lawsuit against the Daily Mail for defamation, claiming the article had caused him “tremendous harm to his personal and professional reputation and prospective economic opportunities, as well as causing him significant humiliation and emotional distress.”

The Daily Mail did not immediately respond to a request for comment.

According to court documents, Lindell specifically cites the report’s claim that he gifted alcohol to Krakowski during their alleged relationship.

“As a recovering addict and alcoholic who frequently writes and speaks publicly about his spiritual triumphs over substance abuse, Mr. Lindell is horrified by the Defendants’ fabricated and very public accusations,” the lawsuit read.

On Tuesday, Lindell revised the lawsuit against the British tabloid, adding an amendment about how the report impacted the associations with the Lindell Recovery Network, a “faith-based” nonprofit founded in 2019 that “provides services for various forms of addiction, mostly substance, and behavioral addiction, along with co-morbidities such as anxiety and addiction,” according to the lawsuit.

“Mr. Lindell’s name is attached to the network and his personal story as a Christian who came back from his addiction to become a success is emphasized,” the lawsuit read.

Lindell claimed that the organization has only been able to partner with “a handful of churches,” and the lawsuit said churches “may be pulling out because of Defendants’ allegations about Mr. Lindell.”

It was not immediately clear as to why the report may have impacted the LRN’s affiliations with Christian networks and churches, and Insider reached out to MyPillow and to Lindell for more information.

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Roger Stone sued by federal government for nearly $2 million in unpaid taxes and interest

Roger Stone, longtime political ally of U.S. President Donald Trump, arrives for a status hearing in the criminal case against him brought by Special Counsel Robert Mueller at U.S. District Court in Washington, U.S., April 30, 2019. REUTERS/Joshua Robertsle
Roger Stone.

  • GOP strategist and Trump ally Roger Stone and his wife were sued by the federal government for $2 million in unpaid taxes.
  • The complaint accused the couple of using their company to avoid paying personal income tax.
  • Stone was indicted in 2019 on several charges connected to the Mueller investigation on Russian interference in the 2020 election. He was later pardoned by Trump.
  • See more stories on Insider’s business page.

Former GOP strategist Roger Stone was sued Friday by the federal government for nearly $2 million in unpaid taxes, interest, and penalties.

The complaint was filed Friday against Stone and his wife Nydia Stone to collect unpaid federal income tax liabilities for nearly $1.6 million between the years 2007 through 2011, as well as more than $400,000 in 2018, according to court documents.

The suit, which is not an accusation of criminality, was filed in the US District Court for the Southern District of Florida.

Stone was indicted on several felonies in January 2019 – including making false statements to Congress, obstruction of justice, and witness tampering – in connection with the special counsel Robert Mueller’s investigation on Russian interference in the 2016 election.

Former President Donald Trump commuted Stone’s 40-month prison sentence in July last year, then later granted Stone a full pardon on the felony charges in December 2020.

According to the complaint, the Stones used a company they owned called Drake Ventures to pay their federal taxes. After Stone was indicted in January 2019, they opened a trust through the company to help them purchase their residence in Florida, which has no state income taxes.

“Although they used funds held in Drake Ventures accounts to pay some of their taxes, the Stones’ use of Drake Ventures to hold their funds allowed them to shield their personal income from enforced collection and fund a lavish lifestyle despite owing nearly $2 million in unpaid taxes, interest, and penalties,” the complaint read.

The Stones failed to pay their $20,000 monthly installment payment to the IRS in March 2019, according to the complaint, causing the agency to terminate its installment agreement, according to the lawsuit.

“The Stones intended to defraud the United States by maintaining their assets in Drake Ventures’ accounts, which they completely controlled, and using these assets to purchase the Stone Residence in the name of the Bertran Trust,” according to the complaint.

In a statement to CNN, Stone called the complaint “preposterous.”

“They are well aware that my two-year struggle against the epically corrupt Mueller investigation has left my wife and I on the verge of bankruptcy,” Stone said in the statement. “I have continued to eke out a living through my company Drake Ventures.”

“To describe my current lifestyle as ‘lavish’ will be proved to be ridiculous in court. The political motivation of the DOJ Will be abundantly clear at trial,” he continued.

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Ex-Rep. Katie Hill loses lawsuit against Daily Mail for publishing nude photos of her, accuses judge of thinking ‘revenge porn is free speech’

katie hill congress
Then-Rep. Katie Hill answers questions from reporters at the Capitol following her final speech on the floor of the House of Representatives on Oct. 31, 2019.

  • A judge dismissed Katie Hill’s lawsuit against the Daily Mail over the outlet publishing nude photos of her.
  • The judge ruled that the photos were a matter of public concern. Hill’s attorney said they intend on appealing the case.
  • The former congresswoman accused the judge of thinking “revenge porn is free speech.”
  • See more stories on Insider’s business page.

A Los Angeles judge dismissed former Rep. Katie Hill‘s lawsuit against the Daily Mail over the outlet publishing what she called on Twitter, “nonconsensual nude images” of her.

Los Angeles Judge Yolanda Orozco ruled Wednesday that the photos were a “matter of public concern,” the Orange County Register reported.

“I sued the Daily Mail for their publication of my nonconsensual nude images,” Hill wrote in the tweet on Wednesday. “Today, we lost in court because a judge – not a jury – thinks revenge porn is free speech.”

“This fight has massive implications for any woman who ever wants to run for office, so quitting isn’t an option,” she added.

Hill filed a lawsuit under the “revenge porn law” against the Daily Mail, her ex-husband Kenny Heslep, and Salem Media Group, which owns the conservative blog RedState which published a nude picture of Hill with a campaign aide in 2019.

The ex-Congresswoman was elected as a Democratic representative from California in 2018. In 2019, allegations emerged that Hill had sexual relationships with campaign and congressional staffers, which she initially denied but later confirmed she had a relationship with one campaign staffer. In late October, the Daily Mail published nude photos of her with a campaign aide, which prompted the Hill’s lawsuit against the tabloid. She resigned in light of the nude photos and allegations.

She sued her ex-husband, accusing him of leaking the photos to RedState and the Daily Mail. The media outlets maintained that the publication of the photos was not in violation of the law under the First Amendment.

Legal experts told Insider’s Jacob Shamsian that the lawsuit may not stand in court because of the First Amendment, but the suit against Hill’s ex-husband still has good chances.

The judge ruled that the photos reflected Hill’s “character, judgment and qualifications for her congressional position.”

Hill’s attorney Carrie A. Goldberg tweeted that they intend on appealing the case, saying that she and Hill think an “appellate court will disagree” that the publication of the photos are protected under the First Amendment and that the case was dismissed on anti-SLAPP grounds.

Goldberg added that dismissing the case “sets a dangerous precedent for victims of nonconsensual pornography everywhere.”

“Anybody who dares enter the public eye should now have legitimate concern that old nude and sexual images can be shared widely and published by any person or media purporting to have journalistic intentions,” Goldberg wrote. “This ruling has the exact opposite effect California’s revenge porn intended – which was to reduce and not amplify or promote nude images without consent.”

“Today we have victims of revenge porn who are being frozen out – who are losing access to our judicial system and the freedom to dream big if they have anybody in their past with nude images they can share,” Goldberg continued.

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Uber ordered to pay $1.1 million to blind passenger who was denied rides 14 separate times

GettyImages 577083258  DENVER, CO - JULY 18: Mike Hess, who is blind, get a ride from an Uber driver after his lunch meeting in Cherry Creek, July 18, 2016. Hess relies heavily on Uber to get around. (Photo by RJ Sangosti/The Denver Post via Getty Images)
A blind passenger gets into an Uber in Denver, Colorado (Lisa Irving not pictured).

An independent arbitrator on Thursday ordered Uber to pay $1.1 million to a blind passenger for illegally discriminating against her after its drivers refused her rides on 14 occasions.

The arbitrator also rejected Uber’s argument it wasn’t liable for discrimination by its drivers because they’re contractors.

Uber said it strongly disagreed with the ruling.

Lisa Irving, a San Francisco Bay Area resident who is blind and relies on her seeing-eye dog, Bernie, to help her get around, brought the claim against Uber in 2018 after “she was either denied a ride altogether or harassed by Uber drivers not wanting to transport her with her guide dog,” according to the arbitrator’s ruling.

Uber drivers left Irving stranded late at night, caused her to be late to work (which eventually contributed to her getting fired), and on two occasions, verbally abused and intimidated her – and that the discrimination didn’t stop even after she complained to Uber, her lawyers told Insider in a statement.

“Of all Americans who should be liberated by the rideshare revolution, the blind and visually impaired are among those who stand to benefit the most. However, the track record of major rideshare services has been spotty at best and openly discriminatory at worst,” Catherine Cabalo, one of Irving’s attorneys, said in the statement.

“The bottom line is that under the Americans with Disabilities Act, a guide dog should be able to go anywhere that a blind person can go,” Cabalo added.

“We are proud Uber’s technology has helped people who are blind locate and obtain rides. Drivers using the Uber app are expected to serve riders with service animals and comply with accessibility and other laws, and we regularly provide education to drivers on that responsibility. Our dedicated team looks into each complaint and takes appropriate action,” Uber spokesperson Andrew Hasbun told Insider in a statement.

But the arbitrator found Uber employees who investigated possible incidents of discrimination were “trained … to coach drivers to find non-discriminatory reasons for ride denials” and even to “‘advocate’ to keep drivers on the platform despite discrimination complaints.”

Under the Americans with Disabilities Act, it’s illegal for transportation businesses that are subject to the law to refuse to transport people with guide dogs, but Uber tried to shift the blame to its drivers, arguing it wasn’t responsible for any ADA violations because its drivers are independent contractors.

The arbitrator disagreed, ruling Uber was also liable for ADA violations because of its “contractual supervision over its drivers and for its failure to prevent discrimination by properly training its workers.”

However, classifying drivers as contractors is a strategy that has allowed Uber to avoid legal liability in other contexts, such as when a pedestrian alleged that she nearly lost her leg after being struck by an Uber.

The strategy has also allowed Uber to avoid paying drivers’ health insurance, sick pay, and unemployment insurance, shifting those costs to taxpayers – who paid $80 million last year to keep Uber and Lyft drivers afloat during the pandemic, making the companies one of the largest beneficiaries of a subsidy program aimed at small businesses.

Uber, Lyft, and other ride-hailing and food delivery companies have aggressively fought efforts in multiple states and countries to reclassify drivers as employees, which would add significant additional costs to their already unprofitable business models. Earlier this week, UK-based food delivery company Deliveroo’s initial public offering tanked by 30% after investors expressed concerned about how it had exploited its drivers.

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2 Capitol police officers who were on duty during the January 6 siege sued Trump for inciting riot

capitol riot siege
WASHINGTON, DC – JANUARY 6: Trump supporters clash with police and security forces as people try to storm the US Capitol on January 6, 2021 in Washington, DC. – Demonstrators breeched security and entered the Capitol as Congress debated the 2020 presidential election Electoral Vote Certification.

  • Two Capitol police officers have sued Trump, accusing him of inciting the mob that stormed the Capitol on January 6.
  • Officers James Blassingame and Sidney Hemby claimed they sustained both physical and mental injuries in the riots.
  • The lawsuit from the two Capitol police officers followed two similar suits from Democratic lawmakers.
  • See more stories on Insider’s business page.

Two Capitol police officers sued former President Donald Trump, accusing him of inciting the violent insurrection on January 6.

The lawsuit was in relation to injuries they sustained during the riots by the “insurrectionist mob, which that Trump had inflamed, encouraged, incited, directed, and aided and abetted,” according to court documents obtained by Insider.

The complaint was filed Tuesday by officers James Blassingame and Sidney Hemby, claiming that they were assaulted by protesters who sprayed them with aerosol chemicals like pepper spray, bear spray, and tear gas, which left chemical burns on their skin. They were among other officers who were attacked with “rocks, bottles, fire extinguishers, metal poles,” according to court documents.

Alongside the physical injuries he received during the riots, Blassingame also sustained a “severe emotional toll” in light of the incident, including depression, according to the lawsuit.

“He is haunted by the memory of being attacked, and of the sensory impacts – the sights, sounds, smells and even tastes of the attack remain close to the surface,” the lawsuit reads. “He experiences guilt of being unable to help his colleagues who were simultaneously being attacked; and of surviving where other colleagues did not.”

The lawsuit said the January 6 riots took a mental toll on Hemby as well.

“When he got home on the night of January 6, 2021, he was in a heightened emotional state and unable to sleep,” the lawsuit read. “He relived the moments he was under attack. He felt unsafe and each time he drifted off to sleep, he was awakened by the fear that people were trying to break into his home.”

The officers are seeking unspecified monetary damages with the lawsuit, but documents say the “amount in controversy exceeds $75,000, not counting interest and costs.”

The lawsuit from the two Capitol police officers followed two suits from Democratic lawmakers – Rep. Eric Swalwell and Rep. Bennie Thompson – in connection to the Capitol siege.

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Amazon will pay contract delivery drivers $8.2 million to settle a wage-theft lawsuit

Amazon delivery driver packages
  • Amazon has agreed to pay $8.2 million to settle a wage-theft lawsuit, Vice News reported Friday.
  • Contract delivery drivers alleged Amazon was to blame for drivers not receiving legally required breaks and overtime.
  • Amazon has faced similar legal challenges in California and other states.
  • See more stories on Insider’s business page.

Amazon agreed last month to pay some of its contract delivery drivers in Washington state $8.2 million to settle a class-action wage-theft lawsuit, reported earlier on Friday by Vice News and confirmed by Insider.

The lawsuit, originally filed by two Amazon delivery drivers in 2017, had alleged Amazon was partly to blame for illegally failing to pay drivers the minimum wage and denying them compensation for overtime and rest breaks.

The drivers, Gus Ortiz and Mark Fredley, worked for Amazon delivery service partner Jungle Trux – one of a sprawling network of contractors Amazon uses in part to reduce its legal liability and labor costs.

Ortiz and Fredley alleged Amazon imposed delivery quotas of 150 to 200 packages per day, forcing drivers to skip legally mandated rest breaks and work past their 10-hour shifts to complete the routes, and that Jungle Trux failed to pay them for those extra hours.

The settlement, first reported on Friday, covers drivers who worked for eight Amazon delivery service partners (DSPs) in Washington state between December 2014 and July 2020: Dash Delivery, Delivery Force, A‐1 Express Delivery Service (doing business as 1‐800 Courier), Progistics Distribution, Revelation Delivery, Genesis Delivery, and Transportation Brokerage Specialists.

“Amazon does not tolerate violations of labor laws. Where we find repeated violations, or an inability to correct labor violations, we terminate contracts with DSP program participants,” Amazon spokesperson Leah Seay told Insider in a statement.

But the company has faced a number of legal challenges from drivers employed by its DSP network.

California regulators fined Amazon $6.4 million for wage-theft violations earlier this month concerning former Amazon contractor Green Messengers. Amazon told Insider it was “not aware of the investigation” and is appealing the fine.

Amazon is also facing class-action lawsuits over wage-theft allegations in Colorado, Florida, Illinois, Kansas, Maryland, Minnesota, Missouri, Ohio, Texas, and Washington state, according to Vice’s analysis of court records.

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A lawyer filed more than 100 lawsuits over vanilla flavoring in foods and drinks, arguing most of it is fake

vanilla flavor ice cream
Close up of a vanilla flavor ice cream sandwich which has chocolate cookies in the external sides.

  • Spence Sheehan has filed more than 100 lawsuits over vanilla flavoring.
  • He argued companies can not say their product has vanilla if it’s not mostly from vanilla beans.
  • Experts have said these cases have no merit because customers don’t expect real vanilla.
  • Visit the Business section of Insider for more stories.

Over the past two years, New York lawyer Spencer Sheehan has filed more than 100 lawsuits against companies marketing products with imitation vanilla flavoring as simply “vanilla.”

Sheehan told Insider he started these cases after noticing a bottle of A&W Root Beer had a label saying “made with aged vanilla” on it. He said he was skeptical about whether it contained authentic vanilla.

“I didn’t really know too much about the vanilla flavoring at that time, but I could sense that something was amiss and eventually I gathered more information and was able to connect with many more people who are more knowledgeable than me and after that, I filed a couple of cases,” Sheehan said.

Companies like Chobani, McDonald’s, the drink-maker Keurig Dr Pepper, and the Trader Joe’s grocery chain have all been targeted by the suits, which involve various products, from ice cream to yogurt, milk, and coffee creamer.

Sheehan says he believes companies are tricking customers since their products usually only have a tiny amount of pure vanilla.

Pure vanilla is harvested from vanilla beans. HuffPost reported in 2019 that a kilogram cost around $500. From planting to harvesting and curing, it can take between 12 to 14 months before vanilla beans can be used to produce the vanilla extract.

Artificial vanilla, which is more commonly used, is made from a synthetic form of vanillin, the main compound in vanilla beans that gives them their flavor. Synthetic vanillin is made from things like wood pulp, clove oil, and – at one point – the anal glands of beavers, HuffPost reported.

Imitation vanilla can be at least 20 times cheaper to produce than natural vanilla.

Legal experts told Insider Sheehan’s cases don’t have much merit because customers don’t expect natural vanilla in products as long as the products taste like vanilla.

But Sheehan said it’s uncommon for people to know the difference and that they should be able to make up their own minds about whether or not they care.

“I object and disagree that people don’t expect this. That would mean that people are so smart as to know all of these things. Like how should somebody know all of this technical stuff?” he said. “They know when a label shares artificial flavors on it and that’s what the labels do say on most products in the supermarket … every product it’s so common on, every carton artificially flavored, naturally flavored.”

He added: “I think people expect what they’re told.”

What’s on the label

Sheehan argues companies are violating labeling requirements set by the Food and Drug Administration, by not labeling products properly when they place just a vanilla label when it’s actually mostly imitation product.

He said there are more special regulations from the FDA on vanilla than on any other product used for flavoring because “it is quite expensive and it’s very easily adulterated, meaning it’s very difficult to tell the difference between real vanilla and fake vanilla.”

However, over a 12-month period, New York courts dismissed four different complaints challenging vanilla-flavoring claims.

“Multiple judicial opinions out of New York’s federal courts, including a decision issued earlier this week in Manhattan, have dismissed cases predicated on this ‘vanilla-labeling’ theory,” Tommy Tobin, an attorney at Perkins Coie LLP, told Insider late last month.

In a recent newsletter, the firm said while the vanilla cases dominated food litigation in 2020, they may be “nearing an endpoint” this year, adding there has been “increasing impatience” from courts when it comes to the topic.

“This is a remarkable trend and represents about a quarter of overall food-litigation filings in 2019 and 2020,” Tobin said.

McDonald’s, in a filing last month to support a motion to dismiss the case Sheehan brought against it, referenced several other vanilla-related cases that were dismissed.

A case Sheehan filed against Wegmans over ice cream labels was also thrown out. The court argued buyers’ main concern is getting ice cream that tastes like vanilla and not necessarily something derived from the vanilla bean.

“The buyer’s first desire is for ice cream, and when he is in the frozen food area he must select, from many choices (chocolate, lemon, mint, lime, etc.) the one he wants. Thus the large-type “Vanilla” is of immediate use. Of course he is not looking for a bowl of vanilla, and the next largest words confirm that the container holds ice cream. Those who prefer natural ingredients will note that it has natural vanilla flavor, and no artificial flavors,” District Judge Louis Stanton in the Southern District Court of New York said.

On February 22, US District Judge Katherine Polk Failla of the Southern District Court of New York dismissed a case Sheehan filed on behalf of a plaintiff against Oregon Chai, a company that makes flavored chai.

Sheehan said he’s always had a passion for consumer issues. Since he started filing vanilla lawsuits he’s been able to expand his firm from just one part-time paralegal to now having two full-time attorneys. “I have an interest in other consumer issues. I don’t want to be pigeonholed,” he said.

“I may not have a lot of non-vanilla cases, but vanilla is the most unique and interesting.”

Have a news tip? Contact this reporter at salarshani@insider.com

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Former Theranos CEO Elizabeth Holmes is pregnant, and is requesting her federal trial to be delayed again

elizabeth holmes
Elizabeth Holmes, founder of Theranos.

  • Theranos founder and former CEO Elizabeth Holmes is pregnant, her lawyer says.
  • Holmes expects to give birth in July, and is asking to push her trial back to the end of August.
  • The federal prosecution also requested a delay due to her pregnancy.
  • Visit the Business section of Insider for more stories.

Founder and former Theranos CEO Elizabeth Holmes is pregnant, according to new court documents.

Holmes expects to give birth in July, and is requesting a delay to her federal trial, according to newly filed court documents. Both Holmes’ lawyers and the prosecution requested the trial’s delay. If approved, she’ll face trial for multiple federal charges of fraud starting on August 31.

Holmes, who was the focus of an HBO documentary about Theranos, is alleged to have defrauded the company’s investors out of millions of dollars with the promise of a new type of blood test. That test was purported to perform a multitude of blood tests, able to detect everything from high cholesterol to cancer, with a simple pin prick.

The company raised over $700 million from investors on the promise of such a test. By August 2015, the FDA began investigating Theranos and found “major inaccuracies” in its tests.

Holmes, alongside former Theranos president Sunny Balwani, was charged with nine counts of wire fraud and two counts of conspiracy to commit wire fraud by the US Department of Justice in 2018. She subsequently stepped down from her role as CEO.

If convicted, Holmes is facing upwards of 20 years in federal prison.

Got a tip? Contact Insider senior correspondent Ben Gilbert via email (bgilbert@insider.com), or Twitter DM (@realbengilbert). We can keep sources anonymous. Use a non-work device to reach out. PR pitches by email only, please.

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Why I’m suing McDonald’s for discrimination along with 76 other Black former franchisees

mcdonald's
  • Last year, whistleblowers went public with allegations that McDonald’s “pushed out” Black franchisees and discriminated against its own Black executives.
  • This led me and 76 other Black franchisees to file a lawsuit claiming the company defaulted to put Black owners in unstable urban areas. 
  • Through our allegations, we aim to show how McDonald’s has treated its Black owners as second-class citizens. 
  • This is an opinion column. The thoughts expressed are those of the author. 
  • Visit the Business section of Insider for more stories.

I played six seasons in the NFL and never took a hit as hard as the ones McDonald’s put on me during my 24 years as an operator of several franchises in Atlanta.  

Becoming a McDonald’s franchisee in 1992 was a dream come true. Unfortunately, I entered a system that essentially quarantined Black operators into less-stable, less-profitable areas while White franchisees were given safe, lucrative locations where they could print money.

Early last year, internal corporate whistleblowers went public with allegations showing that McDonald’s “pushed out” Black franchisees and discriminated against its own Black executives. This disclosure was a moment of clarity for me and dozens of other former operators. We believe we faced discrimination that was not random, but systemic and occurring at the same time McDonald’s was publicly portraying itself as a friend of the Black entrepreneur and profiting greatly from millions of Black customers

This whistleblower lawsuit was the reason I and 76 other former franchisees filed a federal lawsuit last year. Our suit claims that the company’s default position was to put Black owners into unstable urban centers where White operators would rarely if ever be asked to buy a store. If he or she had a choice, what operator – White or Black – would seek out a store in areas where drug deals, theft, gang violence and, sometimes, murder are regularly on the menu?

I know this firsthand. McDonald’s “offered” me four stores with a “take-it-or-leave-it” attitude. Three of the four stores were in what I charitably call economically distressed, high-crime areas. All needed major rebuilds or renovations.  

While our lawsuit is complex, it clearly sets out its claim that Black operators – because of terrible locations – were forced to pay hundreds of thousands of dollars out of our own savings for security to protect employees, customers and property. It asserts that we were given misleading data to sway location decisions and when we finally took over a store, many – like mine – were in disrepair and in need of drastic modernization. And – adding insult to injury – that we were on the hook for the renovation costs. Perhaps its most troubling allegation is that Black franchisees were regularly given poor internal reviews that later could be used as justification for terminating franchise contracts.

I was one of those under the microscope. Inspectors would regularly arrive unannounced late on Friday nights with what seemed like a goal of documenting the smallest infraction. In a burst of candor, one of the officials suggested I, as a mere three-store operator, should just sell my stores and get off the stage. 

This kind of treatment is symptomatic of the decline of the Black operator. In 1998, there was an all-time high of 377 Black franchisees; today only 186 remain. At the same time, the number of McDonald’s stores have gone from just over 15,000 to 36,000.

Our lawsuit claims the average annual sales for the Black-owned stores was about $2 million. This sounds like a big number, but it is $700,000 below the company’s national average per store of $2.7 million from 2011 to 2016 and $2.9 million last year. 

McDonald’s has always had a tense relationship with Black Americans. It took a boycott in the late 1960s for the first Black franchise to open its doors. In the 1980s, American Civil Rights leaders like Rev. Jesse Jackson were warning McDonald’s that Black franchisees were being subjected to a double standard. In the 1990s, a top McDonald’s executive is quoted in the lawsuit’s complaint as saying the “company has placed many Black Franchisees in restaurants that have not allowed them to achieve the same level of economic success as their peers.”

McDonald’s is always coming up with new marketing ideas to curry favor with its Black customer base, but they may do little more than make those in the C-Suite feel a little better about themselves. 

Undoubtedly, McDonald’s is one of the world’s great brands and it is shameful that it may take a federal lawsuit to make the company face the accusations that it has been treating its Black owners as second-class citizens. 

[Editor’s note: McDonald’s has denied the claims made in the author’s lawsuit, calling the accusations “a conglomeration of incendiary and baseless allegations – with skewed ‘facts’ and cherry-picked information- that unsuccessfully seeks to assert a claim of intentional discrimination.” The company has also filed a motion to dismiss the lawsuit.]

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