Owen Diaz, a Black man who was formerly working at Tesla’s Fremont factory as an elevator operator, has had his payout in a racial bias lawsuit slashed all the way from $15 million to $3.2 million.
A federal jury in San Francisco returned a verdict on Monday after a week-long trial in which Tesla was found to have failed to prevent severe racial harassment at its flagship assembly plant. The EV manufacturer has been ordered to pay Diaz, who worked as an elevator operator at the factory, $175,000 in emotional distress damages and $3 million in punitive damages, which are intended to punish unlawful behavior and deter future cases.
Diaz filed his first lawsuit against Tesla in 2017, alleging that the company failed to act after he repeatedly complained to managers about employees repeatedly calling him racist slurs and drawing swastikas and racist caricatures on walls and work areas. Diaz was awarded $137 million by a different jury in 2021. Tesla appealed the verdict, resulting in a new trial. In June 2022, U.S. District Judge William Orrick reduced the jury award to $15 million, stating that the jury award was excessive at the time. Diaz and his attorneys rejected the $15 million settlement, which included $1.5 million in compensatory damages and $13.5 million in punitive damages, claiming it was unjust and would not deter Tesla from further misconduct.
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Diaz’s decision to return to trial was a gamble that did not pay off. The jury verdict on Monday was a huge blow not only to Diaz but also to civil rights activists who want to increase punitive damages for companies that have been 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, the trial last week was not intended to determine whether Tesla was liable. Previous trials found that Tesla did not do enough to prevent racial harassment at the Fremont factory. The new trial was to determine an appropriate payout, and as a result, less evidence was presented at trial, which was due in part to Orrick’s prohibition on introducing new evidence into the case.
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Diaz’s lawyer, Bernard Alexander, urged the jurors on Friday to award him nearly $160 million in damages, sending a message to Tesla and other large corporations that they will not get away with a slap on the wrist for failing to address discrimination. Diaz’s testimony last week included a tearful recounting of various incidents that occurred at the factory during his nine-month stay. The plaintiff claimed that the job caused him anxiety and affected his relationship with his son, who also happened to work at the factory.
Alex Spiro, Tesla’s lawyer, told the jury that Diaz was a confrontational employee who exaggerated claims of emotional distress. Spiro stated that Diaz’s attorneys failed to provide evidence of any long-term damage caused by Tesla. He also claimed Diaz did not file written complaints with superiors. Diaz testified that he had repeatedly expressed his displeasure to lawyers and discussed complaints with human resources officials.
Tesla could not be reached for comment but has previously denied wrongdoing. A number of similar lawsuits have been filed against the company for tolerating racial and sexual harassment, including one from California’s Civil Rights Department.
Diaz’s attorneys attempted a motion for mistrial on Friday, claiming that Tesla’s team violated Orrick’s ban on introducing new evidence by questioning Diaz and other witnesses about incidents in which Diaz allegedly made racist or sexual remarks. Orrick denied the motion, stating that Diaz’s attorneys had failed to demonstrate that the questioning had prejudiced the jury.
This does not mean that the case is over for either party. Saba anticipates cross-appeals in this case. Diaz’s attorneys will almost certainly file a post-trial motion seeking a new trial on the same grounds as their motion for a mistrial.
Similarly, he anticipates Tesla will file a post-trial motion to reduce the punitive damages to $3 million, which he considers “a pretty excessive amount compared to $175,000.” Saba noted that punitive damages are usually around 4x the amount awarded for emotional damages.
