Tesla Must Pay $137M In Race Harassment Suit

A former Tesla subcontractor was awarded $136.9 million by a California federal court on Wednesday, after the jury found that the electric automaker was responsible for him being subjected to a racially hostile work environment in the company’s Fremont, California factory because he was Black.

TeslaPhoto Credit: Shutterstock

After less than four hours of deliberations, the jury awarded Owen Diaz $6.9 million in compensatory damages — $4.5 million for past emotional distress and $2.4 million for future emotional distress. The jury also found the electric vehicle maker failed to take reasonable steps to prevent the harassment and Tesla’s negligent supervision was malicious, oppressive or reckless, awarding an additional $130 million in punitive damages “to get Tesla’s attention,” Diaz’s attorney J. Bernard Alexander told Law360.

Diaz testified that he suffered emotional distress after he and his son were called the N-word by co-workers and supervisors, noting that complaints to management failed to cause the behavior to cease.

Diaz, his son and another plaintiff, Lamar Patterson, initially sued Tesla in California state court in 2017, describing their time working at the factory in 2015 and 2016 as a “scene straight from the Jim Crow era.” Tesla removed the case to federal court, and U.S. District Judge William H. Orrick sent Patterson’s claims to arbitration.

Tesla, CitiStaff Solutions and nextSource Inc. requested that Judge Orrick grant them summary judgment on nearly all the claims in 2019, but the judge ordered the companies to face trial. CitiStaff settled with Diaz in March 2020 and nextSource was terminated as a defendant, leaving Tesla to face the remaining claims alone.

During the trial, the jury heard testimony from several former Tesla subcontractors who said they heard the N-word used daily at the factory.

Diaz himself testified to finding a racially offensive cartoon at the factory, depicting a dark-skinned person with large lips and a bone in his hair with a caption that read, “Booo,” but after the company’s investigation, his harasser received only a suspension and a warning. He said other complaints were not properly investigated or resolved, emboldening the harassers.

Tesla had no written procedures for coordinating investigations into racial harassment involving contractors and did not provide standardized training to supervisors on how to conduct investigations into racial harassment, Tesla human resources administrator Annalisa Heise testified.

Employee Ramon Martinez, one of Diaz’s alleged harassers, was called to testify by Tesla. Martinez denied the allegations against him, saying he never used racial slurs nor threatened Diaz. Martinez was also accused of drawing the racially offensive cartoon at the Tesla factory in 2016.

Martinez, who worked for a staffing agency at the time, admitted to drawing the cartoon but testified that he hadn’t understood the racial significance of it. Martinez went on to be hired as a direct Tesla employee.

Diaz’s attorney, stated on Monday that he is pleased the jury understood that Tesla’s zero-tolerance harassment policy amounted to “lip service.”

Last year, the carmaker disclosed in its first U.S. diversity report that Black employees make up just 4% of Tesla’s leadership roles in America and only 10% of its total workforce.

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