Carmaker Tesla ordered to pay $3.2m in US racial bias lawsuit

The multimillion-dollar award is significantly less than previously awarded in the case, brought by a former employee.

The electric vehicle manufacturer Tesla has been ordered to pay $3.2m in a lawsuit that alleged the company allowed for racial harassment to go unchecked at its flagship assembly plant in the United States.

On Monday, a federal jury in San Francisco, California, awarded $175,000 for emotional distress and $3m in punitive damages to Owen Diaz, a Black employee who formerly worked at Tesla’s factory in Fremont.

Diaz has alleged that Tesla failed to respond when he reported enduring consistent harassment in his role as a lift operator from 2015 to 2016.

That harassment allegedly included racial slurs, insulting caricatures and swastikas etched onto toilet walls.

Monday’s decision, however, is a significant decrease from what a jury initially awarded Diaz in 2021. In one of the largest penalties for employment discrimination in US history, that jury ordered compensation of $7m in damages for emotional distress and $130m in punitive damages.

US District Judge William Orrick later slashed that total to $15m, saying it was the “highest award supported by the evidence”. He cited Supreme Court precedent, which asserts that punitive damages should generally not exceed 10 times the amount of other compensatory damages.

Orrick, however, affirmed the jury’s conclusion that Tesla was liable for damages, calling the evidence presented in the case “disturbing”.

But Diaz opted instead for a new trial to reassess the damages in his case. He testified before the jury last week, explaining how the racism he experienced affected his mental health and led to difficulties with his son, who also worked for Tesla.

His lawyer, Bernard Alexander, called on Friday for the jury to award him $160m in damages in order to signal to large companies like Tesla that racist behaviour should not be tolerated.

California law requires employers to take “reasonable steps” to address wrongful behaviour in the workplace, including harassment based on race, gender and other protected categories.

“Mr Diaz’s outlook on the world has been permanently changed,” Alexander told the jury.

“That is what happens when you take away a person’s safety.”

Lawyers for Tesla, meanwhile, characterised Diaz as confrontational and exaggerating. They also denounced Diaz’s push for higher damages.

“They’re just throwing numbers up on the screen like this is some kind of game show,” Tesla lawyer Alex Spiro told the jury.

Diaz’s legal team pushed for a mistrial on Friday after Tesla’s lawyers questioned witnesses over racist and sexual remarks Diaz allegedly made. But Judge Orrick rejected the motion, denying that the questions would prejudice the jury.

Following Monday’s decision, Diaz could still order a new trial or appeal for the judge to reconsider the jury’s decision.

Diaz’s case is just one of several complaints against Tesla alleging a hostile workplace environment, though Tesla has denied wrongdoing in any of them.

One former employee sued the company for “rampant sexual harassment“. Last June, 15 present and former employees also filed a class-action lawsuit in a California state court, claiming they were subject to racist treatment on a regular basis.

They said Tesla’s “standard operating procedures” seemed to “include blatant, open and unmitigated race discrimination”.

And in February, several employees at a plant in Buffalo, New York, filed a complaint with the National Labor Relations Board accusing Tesla of unfair labour practices. They said they were unjustly fired after launching union-organising efforts at the plant.