Tesla settles with Black worker after $3.2 million verdict in racism lawsuit

Enlarge / Tesla cars sit in a parking lot at the company’s factory in Fremont, California on October 19, 2022.

Getty Images | Justin Sullivan

Tesla has settled with a Black former factory worker who won a $3.2 million judgment in a racial discrimination case, a court filing on Friday said.

Both sides were challenging the $3.2 million verdict in a federal appeals court but agreed to dismiss the case in the Friday filing. The joint stipulation for dismissal said that “the Parties have executed a final, binding settlement agreement that fully resolves all claims.”

Tesla presumably agreed to pay Owen Diaz some amount less than $3.2 million, ending a case in which Diaz was once slated to receive $137 million. As we’ve previously written, a jury in US District Court for the Northern District of California ruled that Tesla should pay $137 million to Diaz in October 2021.

In April 2022, US District Judge William Orrick reduced the award to $15 million, saying that was the highest amount supported by the evidence and law. Diaz rejected the $15 million award and sought a new damages trial, but a new jury awarded him $3.2 million in April 2023.

Diaz’s attorney, Lawrence Organ of the California Civil Rights Law Group, told CNBC that the parties “reached an amicable resolution of their disputes.” The settlement terms are confidential, he said.

“It took immense courage for Owen Diaz to stand up to a company the size of Tesla,” Organ said. The California Civil Rights Law Group is separately representing thousands of Black workers in a class action alleging that they faced discrimination and harassment while working at Tesla’s factory in Fremont, California.

“Tesla factory was saturated with racism”

Diaz operated a freight elevator at Tesla’s Fremont factory for less than a year beginning in June 2015. “In May 2016, he was ‘separated’ from Tesla without prior warning,” Orrick wrote in the April 2022 ruling that awarded Diaz $1.5 million in compensatory damages and $13.5 million in punitive damages.

“The evidence was disturbing,” Orrick wrote. “The jury heard that the Tesla factory was saturated with racism. Diaz faced frequent racial abuse, including the N-word and other slurs. Other employees harassed him. His supervisors and Tesla’s broader management structure did little or nothing to respond. And supervisors even joined in on the abuse, one going so far as to threaten Diaz and draw a racist caricature near his workstation.”

A Tesla filing in March 2023 argued that “no reasonable jury, properly instructed, could award any punitive damages against Tesla on the record here.” Tesla said it “enforced a policy prohibiting racially hostile conduct,” that it “took concrete and significant steps to remedy each and every racial incident Mr. Diaz reported,” and “likewise took concrete and significant steps to remedy other racially inappropriate conduct of which it was aware.”

Tesla is also facing lawsuits from the California Civil Rights Department and the US Equal Employment Opportunity Commission over alleged discrimination and harassment.

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