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Owen Diaz, the Black former elevator operator at Tesla’s Fremont factory, has seen his payout in a racial bias lawsuit slashed from $15 million to $3.2 million.
Monday’s verdict from a federal jury in San Francisco came after a week-long trial, in which Tesla was once again found to have failed to prevent severe racial harassment at its flagship assembly plant. The EV-maker has been ordered to pay Diaz, who worked at the factory as an elevator operator, $175,000 in damages for emotional distress and $3 million in punitive damages that are designed to punish unlawful conduct and deter future cases.
Diaz first sued Tesla in 2017, claiming the company failed to act when he repeatedly complained to managers about employees frequently calling him racist slurs and drawing swastikas and racist caricatures on walls and work areas. A different jury awarded Diaz $137 million in 2021. Tesla challenged the verdict, leading to another trial. In June 2022, U.S. district judge William Orrick reduced the award to $15 million, saying at the time that the jury award was excessive. Diaz and his lawyers rejected the $15 million, which included $1.5 million in compensatory damages and $13.5 million in punitive damages, claiming it was unjust and wouldn’t deter future misconduct from Tesla.
Going back to trial was a gamble for Diaz that didn’t pay off. Monday’s jury verdict marks a huge blow not just to Diaz, but also to civil rights activists that want to increase punitive damages for companies proven to tolerate discrimination.
“It is always very difficult to retry a lawsuit and attain similar results as before,” Ryan Saba, a civil litigation and trial attorney and partner at Rosen Saba, told TechCrunch. “In the first case, the jury was armed with lots of evidence of the alleged misconduct that Tesla did toward Mr. Diaz. In the second case, that inflammatory evidence was not presented to the jury. And so the muted verdict was likely because the jury didn’t get to hear as much as the liability of it in the first year.”
In other words, last week’s trial wasn’t designed to determine if Tesla was liable. Previous trials already found that Tesla did fail to prevent racial harassment at the Fremont factory. The new trial was to determine an appropriate payout, and the result was less evidence presented at trial, which was in part due to Orrick’s ban on introducing new evidence to the case.
Bernard Alexander, a lawyer for Diaz, urged jurors Friday to award him nearly $160 million in damages, sending a message to Tesla and other large companies that they will not just get away with a slap on the wrist when they fail to address discrimination. Diaz’s testimony last week included a tearful recounting of various incidents at the factory during the nine months he worked there. The plaintiff said the job made him anxious and created a strained relationship with his son, who also worked at the factory.
Tesla’s lawyer, Alex Spiro, told the jury that Diaz was a confrontational worker who exaggerated claims of emotional distress. Spiro said Diaz’s lawyers failed to provide evidence of any long-lasting damage caused by Tesla. He also said that Diaz did not lodge written complaints to supervisors. Diaz testified that he had verbally communicated his distress to lawyers numerous times and discussed complaints with human resources officials.
Tesla could not be reached for comment but has denied wrongdoing in the past. The company is facing a number of similar lawsuits for tolerating racial and sexual harassment, including one from California’s Civil Rights Department.
‘This case is far from over.’
Diaz’s lawyers attempted a motion for mistrial Friday, claiming that Tesla’s team violated Orrick’s ban on introducing new evidence when they questioned Diaz and other witnesses about incidents where Diaz allegedly made racist or sexual comments. Orrick denied the motion, saying that Diaz’s lawyers didn’t show that the questioning had prejudiced the jury.
That doesn’t mean this case is done, for either side. Saba said he expects to see cross appeals here. Diaz’s lawyers will likely bring up a post-trial motion asking for a new trial on the same grounds as their motion for a mistrial.
Similarly, he expects Tesla to bring a post-trial motion to reduce the punitive damages, because $3 million is “a pretty excessive amount compared to $175,000.” Saba noted that punitive damages are usually around 4x the amount awarded for emotional damages.
“This case is far from over.”
