Malati Nayak | bloomberg
The judge signaled that he would likely reduce the jury’s $137 million award in damages to former Tesla Inc. contract worker. for racial slurs at his plant in northern California.
The October decision awarded to Owen Diaz by a San Francisco federal court jury is considered one of the largest in U.S. history for an individual plaintiff in a racial discrimination case.
U.S. District Judge William Orrick on Wednesday said he was “concerned” that the $6.9 million jurors awarded in emotional distress “may not be tied to the stress that Mr. Diaz and his witnesses. What’s more, penalties nearly 20 times that amount are “extremely high,” Orrick said at a hearing on Tesla’s request for a new lawsuit.
“However, I acknowledge the terrible history of racial discrimination in this country,” Orrick said. “Especially when combined with working for a company that tried to present itself as a modern, green, disruptive company that positioned itself as a good place to work, it would naturally exacerbate the suffering that Mr. Diaz was experiencing.”
Orrick said he was inclined to dismiss Tesla’s request for a new trial, provided Diaz agreed to a mitigation. He said he would issue a written decision, but did not specify a timeframe.
Diaz’s lawyer, Michael Rubin, tried to convince the judge to uphold the verdict. He argued that the jury awarded Diaz compensation “not on passion or prejudice, but on evidence and within constitutional limits.”
The reparation-to-punishment ratio was appropriate as it was a rare case of “flagrant reprehensibility,” Rubin said. Penalties are meant to punish and deter, and “it’s important to keep that sting,” he said.
Tesla’s attorney, Kathleen Sullivan, argued that compensatory damages should be as low as $300,000 and punitive damages should be less than four times, based on similar cases. Tesla could have done more, but it has taken some steps to discipline employees that Diaz complained about. “Some efforts to remedy the situation make it less reprehensible,” she said.
Tesla has faced a series of high-profile lawsuits over its treatment of black employees and subcontractors at the company’s Fremont, California auto plant. The head of human resources who defended the company during the controversy, Valerie Capers Workman, left for a new job this month.
Diaz v. Tesla Inc., 17-cv-06748, U.S. District Court, Northern District of California (San Francisco).
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