I do not claim to know all the facts of the paper towel lawsuit, however, my first question to my child would be: "Why were you talking when you were not supposed to be?"
And after a discussion with my child about respect and listening to the teacher, we both would have met with the teacher. My first question to her would be: "What were you thinking?:" If I felt like there was bullying by the teacher I would have discussed it right then. The teacher, administration and my child would have known that any bullying would not be tolerated. My child would apologize for not listening; the teacher would apologize for embarrassing him in class. I would insist that teacher and administration notify me immediately if there were further issues with my child's behavior.
End of story.
My child would get to learn that poor behavior is not OK, and they would also see that I would stand up for them if anyone treated them with disrespect or bullying. Win, win for the child.
What purpose does a lawsuit serve to the children involved? Whatever you think it might be, there has got to be a better way.