On Wednesday, a federal judge dismissed Tesla’s claim that it was not liable for “troubling” racial abuse suffered by a former factory worker. US District Judge William Orrick dismissed Tesla’s “watered down revisionism,” which called plaintiff Owen Diaz’s suffering “mild and short-lived.”
However, the judge reduced Diaz’s monetary award. While the jury awarded Diaz $6.9 million in compensatory damages and $130 million in punitive damages, Orrick instead set the amounts at $1.5 million in compensatory damages and 13 punitive damages .5 million US dollars. He wrote that the new $1.5 million award was “the highest evidence supported by evidence” and that punitive damages under US law could be nine times that amount.
“The evidence was disturbing,” Orrick said Verdict in the United States District Court for the Northern District of California. “The jury heard that racism permeated the Tesla factory. Diaz received frequent racial abuse, including the N-word and other slurs. Other employees harassed him. There was little or no response from his superiors and the broader Tesla management structure. And supervisors even took part in the abuse, with one even going so far as to threaten Diaz and draw a racist caricature near his place of work.”
Tesla wanted to limit the compensatory and punitive damages to $300,000 each.
“Sufficient Legal Basis to Hold Tesla Liable”
Diaz worked at a Tesla factory in Fremont as of June 2015 and was “‘disconnected’ from Tesla in May 2016 without warning,” according to the ruling. Diaz’s paychecks came from a staffing agency called CitiStaff, but he testified that “everything [his] Directions came from Tesla.” He received training and certification from Tesla for his job as a forklift operator. He sued Tesla in October 2017.
After the trial, Tesla asked the court for “a verdict that it is not liable” or, alternatively, “a new trial and a reduction in the amount of damages,” Orrick noted. Tesla argued that it was not liable under 42 USC §1981 – a Reconstruction-era statute prohibiting discrimination in the making and enforcing of contracts – because “Diaz’s employment contract was with a staffing agency that Tesla contracted with not with Tesla itself,” Orrik wrote.
Orrick denied the motion for a judgment on legal grounds, writing:
[T]The jury had sufficient legal basis to hold Tesla liable on two counts. First, it found in a special judgment that Tesla qualifies under the law as Diaz’s employer, albeit not on paper. He could reasonably have established that this employment relationship was governed by an implied contract. Second, it could have determined that Diaz was an intended beneficiary of Tesla’s contract with the staffing agency. As a result, Diaz was entitled to pursue the Section 1981 claim to enforce his rights under that contract. As to the remaining issues, Tesla waived its legal challenge to Diaz’s state law claim of negligent supervision. Tesla’s request for a new trial is also rejected; The weight of the evidence fully supports the jury’s liability decisions.
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