A former Tesla employee who sued the automaker over the racial abuse he experienced in the workplace and won has rejected the court's reduced $15 million judgment against the Texas-based electric car manufacturer.
Plaintiff Owen Diaz received a jury-awarded judgment in 2020 to the tune of nearly $137 million—$6.9 million in compensatory damages and $130 million in punitive damages. However, U.S. district judge William Orrick (who is presiding over the case) slashed the judgment to a combined $15 million, calling the original judgment amount "excessive" and "unconstitutionally large." Diaz had yet to accept the affirmed judgment as of earlier this month, but after being prompted by Orrick with a two-week deadline, he rejected it.
Diaz's lawyers said that the 89 percent judgment reduction was "unjust" and would not be a deterrent for Tesla to prevent future misconduct in the workplace. The rejection will result in the five-year-old lawsuit returning to trial, and a jury asked to determine if Orrick's reduction of the awarded amount was justifiable. Bringing the case back to trial on appeal does present risks, however. Diaz's final judgment could be reduced or even wiped out completely, should a jury find it just, plus ongoing legal fees incurred by both parties.
In his original lawsuit filed in 2017, Diaz alleged that Tesla's management ignored repeat complaints of co-workers, and at least one supervisor used racial slurs toward him during his tenure between 2015 and 2016. He also said that Tesla employees left racist graffiti, including swastikas, around the Fremont plant. Orrick's final ruling on the case supported Diaz's claims, noting that Tesla intentionally avoided the obligations for health and safety owed to its employees.
This lawsuit isn't the only employee-centric case against Tesla. A female employee also sued Tesla in November 2021 after the company failed to protect her from experiencing sexual harassment in the workplace. Another lawsuit filed last week by a Tesla shareholder accuses CEO Elon Musk and Tesla's Board of Directors of neglecting employee complaints and fostering a toxic workplace culture, citing racial and sexual harassment claims.
Musk also recently announced a round of layoffs covering 10 percent of Tesla's salaried staff. The layoffs resulted in two employees filing another lawsuit seeking class-action status against Tesla, alleging that the company violated the federal Worker Adjustment and Retraining Notification (WARN) Act by not providing a 60-day notice ahead of its layoffs. Musk reportedly called the filing "a small lawsuit of minor consequences."
Lawsuits aren't the only financial problems looming over Tesla lately. Musk recently said that the company's newest factories in Austin, Texas, and Germany are "gigantic money furnaces" and acknowledged that the plants were "losing billions of dollars" as production capacity has been limited by ongoing part and battery shortages. Whether or not that improves in the second half of the year is still an unknown.