The thing that really gets me about this story is it was an ESL School. The students were mostly adults learning to speak English. Not only should an ESL school understand the English language well enough to know what a homophone is, homophones are an extremely important concept for non-native English speakers because that kind of word can cause lexical confusion.
This teacher was fired for doing his job correctly.
Yeah, none of it makes sense. Why would any teacher not immediately file a lawsuit, unless they're not a teacher and they're trying to drum up "engagement"? But hey, just like the story in the OP, no need to ask questions because it jibes with my point of view!