Judge affirms jury's verdict in Tesla racism lawsuit but reduces $137 million payout

A federal judge has reduced the damages awarded to Owen Diaz to $15 million.

Feb 17, 2020 Lathrop / CA / USA - Tesla Factory casting foundry facilities close to Stockton; (Andrei Stanescu via Getty Images)

US District Judge William Orrick has rejected Tesla's argument that it isn't liable to Owen Diaz, according to The Wall Street Journal and Reuters. Diaz is a former Black Tesla worker who accused the company of turning a blind eye to the racial abuse he suffered while working at its Fremont, California factory from 2015 to 2016. Last year, a jury ruled in favor of Diaz and awarded him $6.9 million in compensatory damages, as well as $130 million in punitive damages. Orrick has affirmed the jury's verdict but reduced the award to $15 million.

To be exact, he reduced the compensatory damages awarded to Diaz to $1.5 million from $6.9 million, which he called "excessive." He also slashed the "unconstitutionally large" punitive damages award from $130 million to $13.5 million. Punitive damages awarded by courts are meant to punish a defendant and deter them from repeating their actions — or, in Tesla's case, from allegedly ignoring the racial abuse of a Black worker. Tesla has a market value exceeding $1 trillion, however, and $13.5 million is a drop in the bucket for the automaker. Diaz's lawyer said they plan to appeal the lowered damages award.

Nevertheless, Judge Orrick agreed that Tesla showed a "striking" indifference to Diaz's plight. In his original lawsuit, Diaz said he wasn't just subjected to racial slurs, fellow workers (and even one supervisor) also left drawings of swastika and racist graffiti around the plant. He said Tesla's management neglected to halt the abuse. Judge Orrick wrote in his ruling:

"Not only does the evidence support a finding of recklessness or indifference to Diaz’s health and safety, it supports a finding that Tesla intentionally built an employment structure that allowed it to take advantage of Diaz’s (and others’) labor for its benefit while attempting to avoid any of the obligations and responsibilities that employers owe employees."

Tesla has faced several racial discrimination lawsuits over the years other than Diaz's, with workers claiming that they were subjected to constant racial abuse in its factories. In February, the California Department of Fair Employment and Housing filed a lawsuit against the automaker after finding evidence that its "Fremont factory is a racially segregated workplace" where Black workers are discriminated against. Tesla denied the accusation, saying it "opposes all forms of discrimination and harassment" and that it has a "dedicated Employee Relations team that responds to and investigates all complaints."

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