$137M Verdict Returned Against Tesla for Racial Discrimination

A Northern District of California jury awarded a former Tesla Inc. factory worker a nine figure judgment on Monday after finding that his employer subjected him to a racially hostile work environment and failed to erect the necessary protections. The electric vehicle maker must now pay Owen Diaz $6.9 million in non-economic damages and $130 million in punitive damages.

The African-American complainant, alongside two others including his father, filed the lawsuit in November 2017. It alleged more than a dozen counts of California and federal race discrimination charges and was replete with alleged instances of verbal discrimination on part of the plaintiffs’ superiors. “Instead of a modern workplace … Plaintiffs encountered a scene straight from the Jim Crow era,” the amended complaint said.

The lawsuit named Tesla and four staffing companies, Citistaff Solutions Inc., West Valley Staffing Company, Chartwell Staffing Services Inc., and nextSource Inc., as defendants, calling the services alter egos of Tesla. Diaz reportedly worked as an elevator operator at Tesla’s Fremont, California factory beginning in 2015.

According to the complaint, Diaz was subject to overt racist harassment in the form of verbal slurs and abuse. Allegedly, Citistaff, nextSource, and Tesla repeatedly refused to investigate the racist behavior and instead, sanctioned it. 

Diaz was demoted in 2016, which he believed was for pretextual reasons and, in reality, in retaliation for his complaints. He quit shortly thereafter, when he could no longer stand the “abusive, racially harassing treatment he encountered daily at work.”

Tesla moved for summary judgment in September 2019, which Judge William H. Orrick partly granted several months later. “Material facts are in dispute whether plaintiffs faced severe and pervasive racial harassment in the workplace and whether Tesla, its staffing agency, and the on-scene liaison are joint employers,” the court wrote before stating that “[t]his case will proceed to trial.”

Monday’s verdict was entered after a five-day trial the previous week. Tesla moved for judgment as a matter of law, but was denied by Judge Orrick the morning before the jury returned its decision.

The plaintiff is represented by Alexander Morrison & Fehr LLP and California Civil Rights Law Group. Tesla is represented by Sheppard, Mullin, Richter & Hampton.