I believe that Nonlinear would win, and that actually doing so as of now would be mildly wrong.
It’s worth distinguishing between the threat they made and bringing the actual lawsuit; in this comment you talk about the lawsuit, but in your clarification below you talk about the threat of one. Even if I lay aside the obvious justification for the threat and only consider the possible harms, they’re so insignificant that I don’t think they’re worth considering; I feel like the threat was well justified.
I initially upvoted/delta’d/insightful’d this, but on looking into it further I don’t think that this concern can possibly be right. You mention “extraordinary sums of money”, but Puerto Rico only requires $3,000 dollars of liability insurance; the default liability insurance wouldn’t be relevant if “extraordinary sums of money” are involved. It’s possible that Nonlinear had better insurance for their car; but I feel like the concern here should be about them pressuring their employee to break the law, while your comment’s proposed harms would be almost equally bad if everything were legal but Nonlinear didn’t have good supplemental insurance. (In particular, your comment seems to imply that it’s significantly immortal/problematic for anybody to drive in Puerto Rico without additional insurance.)
(Regardless, I think it’s important to note that, even after receiving Nonlinear’s comments, the original post gives driving without a license as an example of something that “could have had severe personal downsides such as jail time in a foreign country”; that’s what they were presumably responding to.)