Tesla Found Guilty Of Racism But Dodges $130 Million Fine

Industry News / 18 Comments

Judge lowers the punitive damages in racial abuse case from $137 million to $15 million.

In October last year, we reported on the case of Owen Diaz Vs. Tesla. Diaz claims he suffered daily racial slurs at the manufacturer's Fremont factory, including the n-word. The jury found in favor of Diaz and awarded him $6.9 million for emotional distress and $130 million in punitive damages.

If you're not familiar with punitive damages, it's essentially a warning to other companies, which is why the payouts are generally so huge.

Tesla appealed the process, seeking to lower the emotional damage and punitive payout to $300,000 each.

The attempt failed, as US District Judge, William Orrick, agreed with the decision made by jurors in October. Orrick lowered the payout amounts substantially, however.

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2017-2022 Tesla Model 3 Side View
2017-2022 Tesla Model 3 Rear Angle View

The judge lowered the original $137 million payout to just $15 million. According to Reuters, Orrick handed over a 43-page decision that found Tesla guilty of "profound" emotional harm. The decision also mentions Tesla's inadequate actions to combat racism.

However, the judge found the jury's compensatory and punitive damages "excessive" and "unconstitutionally large."

Orrick reduced the compensatory amount to $1.5 million from $6.9 million, and the punitive damages decreased from $130 million to $13.5 million.

Diaz's lawyer, Bernard Alexander, said that Diaz plans to appeal the lowered awards. "We're pleased that the court upheld the jury's finding that Tesla's conduct was "absolutely reprehensible," said Alexander. "The award of $15 million is substantial but does not come close to reflecting the harm caused to Mr. Diaz or the reprehensibility of Tesla's conduct."

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This is not the only racial lawsuit Tesla currently faces. The California Department of Fair Employment and Housing (DFEH) spoke about workers complaining about segregated workspaces in mid-February. Kevin Kish, DFEH director, claims his division found evidence of segregation at the Fremont plant where the Model 3 and other Teslas are built. One worker claims as much as 50-100 racial slurs per day.

Tesla is also caught up in two fatal crash lawsuits. One lawsuit alleges the suspension is unreasonably dangerous, while the other involves Tesla's notorious Autopilot function.

Meanwhile, Tesla's CEO, Elon Musk, is currently on a mission to buy Twitter. He recently put in a bid for $43 billion, citing free speech concerns as his main reason for wanting control of the platform.

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Source Credits: Reuters

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