Holland & Knight Quits Tesla EEOC Case After Polsinelli Exodus

Holland & Knight is bowing out of an employment discrimination case against Elon Musk’s Tesla Inc. after several of the litigating partners decamped to Polsinelli.

Partners Sara Begley and Tina Tellado and associate Mary Vu, who are among a large group of lawyers who recently left Holland & Knight for Polsinelli, have taken the Tesla case with them, according to a court filing. Polsinelli is now co-counsel to Tesla with Reed Smith.

US District Judge Jacqueline Scott Corley in San Francisco issued an order late Tuesday permitting Holland & Knight to exit the case. The firm, in its filings in the dispute this week, didn’t disclose why it withdrew its representation.

Holland & Knight and Reed Smith were unsuccessful earlier this year in their efforts to get dismissed the work discrimination lawsuit filed by the Equal Employment Opportunity Commission. The suit accuses Tesla of fostering a racially hostile and abusive work environment for Black employees at its facility in Fremont, California. The allegations date back to at least May 2015.

The EEOC also claims that Tesla retaliated against some of those who lodged workplace complaints. The Musk-led electric automaker had sought to get the EEOC case put on hold while it battled similar accusations filed against Tesla in state court by California’s civil rights agency.

Elson Squabble

Holland & Knight’s withdrawal from the EEOC case comes three months after the electric vehicle maker fought with the firm over an amicus brief in a separate matter related to Musk’s contested $56 billion pay package.

Charles Elson, a retired University of Delaware professor and Holland & Knight consultant, submitted an amicus brief to Delaware’s Court of Chancery arguing that Tesla shareholders retroactively approving Musk’s 2018 windfall this year likely wouldn’t hold up under Delaware law.

In May, Elson resigned from his Holland & Knight job, ending a 30-year relationship with the firm on corporate governance matters. Elson claimed in a court filing that Tesla threatened to fire Holland & Knight from its outside counsel role in the employment discrimination case over the amicus brief.

A Delaware judge who struck down Musk’s pay package agreed in July to accept Elson’s friend-of-the-court brief over Tesla’s objections. Delaware Chancellor Kathaleen St. Jude McCormick again heard arguments this month from those objecting to, and supporting, Musk’s compensation as Tesla’s chief executive.

Elson’s lawyer Joel Fleming, a co-founder of the Equity Litigation Group, didn’t respond to a request for comment.

Two sources familiar with the matter said the row over the Tesla litigation work led by Begley—a veteran litigator who spent six years at Holland & Knight—and Elson’s brief likely played some part in their decision to join those leaving the firm. Begley’s team has also taken with them to Polsinelli a related Tesla case filed in California state court, according to court filings this week.

Begley, Tellado, and Vu didn’t respond to requests for comment, nor did Holland & Knight partner Thomas Hill, a veteran labor and employment litigator who joined the firm in 2018 from Reed Smith with Begley and Tellado. Hill, who signed the motion for Holland & Knight’s withdrawal, is so far not among the nearly 50 lawyers that have left the firm for Polsinelli within the last few weeks.

Polsinelli Exodus

The exodus saw more than 20 partners at Holland & Knight join Polsinelli in Philadelphia and other cities. Prior to the EEOC and related litigation, Polsinelli hasn’t previously entered an appearance on behalf of Tesla in a US federal court, according to Bloomberg Law data. Polsinelli has, however, handled trademark work for xAI Corp., Musk’s privately held artificial intelligence startup that secured $6 billion in financing earlier this year.

Brian Jazaeri, a former partner at Morgan, Lewis & Bockius who Tesla hired last year as the Austin, Texas-based automaker’s head of litigation, didn’t respond to a request for comment about Holland & Knight. Nor did Tesla.

Holland & Knight is the latest in a long list of large firms to have drawn Musk’s ire. Last year he sued Wachtell, Lipton, Rosen & Katz over its alleged request for a $90 million success fee stemming from its role advising Twitter Inc. on a $44 billion sale to the technology mogul. That dispute was sent to arbitration.

Musk has also taken to Twitter, now called X, to recruit “hardcore” litigators for Tesla’s in-house legal team, while also criticizing firms like Cooley and Perkins Coie over their work representing clients whom he deems unworthy. Musk also reportedly asked Cooley to fire a former associate who had previously worked for the US Securities and Exchange Commission in a case against him.

Other firms come and go without such fanfare.

Reuters reported in July that Tesla replaced Cravath, Swaine & Moore—the firm representing Musk in his Delaware pay fight—with Wilmer Cutler Pickering Hale and Dorr and Quinn Emanuel Urquhart & Sullivan as both of those firms now take the lead for it in a consumer antitrust case in California.

The Quinn Emanuel team in that matter includes partner Alex Spiro, who in recent years has become a go-to lawyer for Musk, the world’s richest man.

The federal case is Equal Employment Opportunity Comm’n v. Tesla, Inc., N.D. Cal., No. 3:23-cv-04984. The state court case is Vaughn v. Tesla, Inc., RG17882082, California Superior Court, Alameda County.