Analysis: Tesla would face tough road in any bid to slash $137 mln racial bias verdict in U.S.

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A Tesla car drives previous Tesla’s main car manufacturing unit after CEO Elon Musk introduced he was defying native officers’ coronavirus illness (COVID-19) restrictions by reopening the plant in Fremont, California, U.S. Could 11, 2020. REUTERS/Stephen Lam/File Picture

  • Allegations of widespread misconduct might justify payout
  • Jury award got here in lawsuit by single Tesla manufacturing unit employee

Oct 6 (Reuters) – Tesla Inc will seemingly search to slash a $137 million jury award for a Black employee who accused the automaker of racial discrimination, however might have problem lowering the decision amid claims that the corporate tolerated widespread harassment, authorized consultants stated.

A federal jury in San Francisco on Monday Tesla to pay $130 million in punitive damages to Owen Diaz, a contract employee who was employed as an elevator operator on the firm’s manufacturing unit in Fremont, California, in keeping with a courtroom submitting.

The jury discovered that Tesla did not take steps to stop race-based harassment of manufacturing unit employees, together with the usage of racial slurs and racist graffiti in loos. Tesla additionally was ordered to pay Diaz $6.9 million in compensatory damages.

Punitive damages are designed to punish and to discourage future illegal conduct, whereas compensatory damages are supposed to pay victims for his or her precise losses.

The U.S. Supreme Court docket punitive damages ought to typically not exceed 10 occasions the quantity of compensatory damages, and that even a ratio better than 4:1 may be extreme. Consequently, giant awards handed down by impassioned juries are generally lowered by trial judges or appeals courts on the behest of defendants.

If Tesla challenges Monday’s verdict, the corporate will seemingly level to the truth that the quantity of punitive damages is sort of 19 occasions the compensatory damages, authorized consultants not concerned within the case stated. Tesla might additionally declare the decision was not supported by proof, and try and settle with Diaz to stave off additional litigation over the scale of the jury award, the consultants stated.

The Supreme Court docket pointers can exit the window if misconduct has a widespread affect on employees and is discovered to be extremely offensive or reprehensible, in keeping with Catherine Sharkey, a professor at New York College College of Regulation.

For the reason that jury discovered that Tesla had created a hostile work setting based mostly on race, it follows that allegations that the corporate tolerated racist speech and graffiti affected different employees and will justify the huge award, she stated.

“The thought is that making an employer pay for that widespread hurt might make them put in place measures to keep away from future hurt,” she stated.

In a memo to staff on Monday, Tesla Vice President Valerie Workman stated the corporate believed the information of the case didn’t warrant the big award, and that Tesla took fast motion every of the 3 times that Diaz complained about racist conduct.

Tesla didn’t responded to requests for touch upon a possible enchantment.

Lawrence Organ, a lawyer for Diaz, stated the case was uncommon due to proof of widespread use of the “N phrase” on the Fremont plant and Tesla’s failure to handle it.

“We’d argue that … the jury obtained it proper, notably in mild of Tesla’s monetary situation as one of many wealthiest companies on the planet,” Organ stated.

A number of authorized consultants stated the award for Diaz was among the many largest in a U.S. discrimination case involving a single plaintiff.

A federal jury in 2014 awarded $186 million to a former AutoZone Shops Inc supervisor in a being pregnant bias case, which on the time was broadly reported within the media to be the biggest verdict of its form. AutoZone moved for a brand new trial however settled with the plaintiff on undisclosed phrases earlier than the movement was determined.

The nine-figure award for Diaz is “fairly extraordinary,” and sends a message to employers that tolerating discrimination may be pricey, stated David Lopez, a professor at Rutgers Regulation College in New Jersey who was basic counsel of the U.S. Equal Employment Alternative Fee through the Obama administration.

Tesla has been accused of tolerating race-based harassment on the Fremont plant in a number of lawsuits apart from Diaz’s, together with a pending class motion in California state courtroom. The corporate has denied the claims and says it has adopted insurance policies to higher handle complaints about racially-charged incidents.

Lopez stated the jurors in Tesla’s case seemingly took under consideration the pervasiveness of the conduct alleged by Diaz and the corporate’s worth and excessive profile, which might additionally come into play if the corporate seeks to decrease the jury award.

Tesla’s market worth almost $800 billion, making it the world’s most beneficial automaker.

“The jury was asking itself, ‘what would sting Tesla and ensure they do not deal with this as simply one other price of doing enterprise?'” Lopez stated.

(This story refiles to appropriate date to Oct. 6 in dateline)

Reporting by Daniel Wiessner; Extra reporting by Hyunjoo Jin; Enhancing by Rebekah Mintzer, Noeleen Walder and Grant McCool


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