Tesla Racism Lawsuit Settles for $3.2 million

San Francisco, CATesla and former Black sub-contractor Owen Diaz have finally settled a California labor racial harassment lawsuit. The settlement ends a long-running battle over how much Tesla would pay Diaz after getting one of the largest awards in a U.S. employment discrimination case overturned.

On March 15, Owen Diaz and Tesla Inc. told the district court that a 2017 lawsuit against the electric-vehicle maker should be dismissed as they both agreed to resolve Diaz's claims that racism permeated Tesla's Fremont, California, facility. Diaz had sued Tesla for violating a California law that prohibits employers from failing to address hostile work environments based on race or other protected traits.

A jury in 2021 awarded plaintiff Diaz a $137 million. A judge said the award was excessive and slashed it to $15 million, which Diaz declined. A California jury in April 2023 awarded Diaz $3.2 million but Diaz appealed and requested a third trial. He said that $3.2 million was insufficient compensation for the psychological damage he suffered, including loss of sleep, depression and damaged relations with his wife and son. Mr. Diaz’s lawyers also argued that the award was not sufficient to punish Tesla for failing to stop the harassment, reported The New York Times.

Judge William H. Orrick ruled that it was adequate compensation and he also denied Tesla's bid to cut the $3.2 million award to $1.75 million, saying he wasn't convinced the jury had made a mistake or that the amount constituted a miscarriage of justice, reported Law360. Orrick said, “Tesla’s conduct was reprehensible and repeated, and it failed to take responsibility or change its ways during Diaz’s time at the company.”

Diaz worked as a freight elevator operator at the Fremont facility for nine months in 2015. Diaz had accused Tesla of failing to act when he repeatedly complained to managers that employees at the Fremont, California, factory frequently used racist slurs and scrawled swastikas, racist caricatures and epithets on walls and work areas. The New York Times in 2021 reported that employees had drawn swastikas and scratched a racial epithet in a bathroom stall and left drawings of derogatory caricatures of Black children around the factory. Despite repeated complaints, the company did little to address the behavior, Diaz said.

His attorney, who is with California Civil Rights Law Group, said, “It took immense courage for Owen Diaz to stand up to a company the size of Tesla. Civil rights laws only work if people are willing to take those kinds of risks. Even though the litigation chapter of his life is over, there’s still a lot of work to do for Tesla.”

This isn’t the only racism lawsuit Tesla has faced. A 2-year-old enforcement action was filed by the California Civil Rights Department and a 6,000-member proposed class action, both of which were filed in California state court. A California Superior Court judge ruled in favor of the employees for the failure to address racism and harassment at its California plant. And in September 2023, the U.S. Equal Employment Opportunity Commission filed a Title VII suit against Tesla in federal court, claiming that racial slurs and race-based stereotypes were common at the Fremont facility going back to at least 2015 and accused the automaker of violating “federal law by tolerating widespread and ongoing racial harassment of its Black employees and by subjecting some of these workers to retaliation for opposing the harassment.” 

The Diaz settlement comes on the heels of Tesla CEO Elon Musk’s widespread criticism for his handling of hate speech on X, formerly Twitter. And NBC News recently reported that Musk has shared unverified claims of cannibalism in Haiti this month on X, and shared posts smearing Haitian migrants as likely cannibals.

According to Reuters, Musk tweeted that "the [3.2  million] verdict would've been zero" if the judge had allowed the company to introduce new evidence in the retrial…Jury did the best they could with the information they had. I respect the decision."