My 7 year old sons teacher called he laughed at her .

It comes down to respect for authority. The teacher cannot have students laughing at her in public. This diminishes her ability to teach. Please don't be one of those parents who always sides with their kid so the teacher feels they have no support. Just let her punish him. It sounds fairly benign. Trust me, he will learn from this experience and be a better person for it.

Teachers cannot allow children to defy them. It's hard enough to keep a classroom of children under control without having one blatantly defy her like it sounds like your son did. You also don't know everything that led up to this call. There are days when teachers feel they're at the end of their rope. Ask your son what happened. If he tells you that EVERYTHING was the teacher's fault, request a conference so that you can talk to her and find out the whole story. Try to see where she's coming from. You're both there because you're interested in your child's education, and it's important that you work as a team.