Tesla Inc. lost a trial with a Black former elevator operator Owen Diaz and is ordered to pay him $137 million for turning a blind eye to racial taunts as well as offensive graffiti he had to endure during his employment at the electric-car maker’s northern California plant.
Owen Diaz’s lawyer Lawrence Organ said that Owen was exposed to a racially hostile work atmosphere, as per the decision of a federal jury in San Francisco on Monday. The verdict has not been immediately confirmed in the electronic court records.
Tesla typically uses mandatory arbitration for the purpose of resolving employee disputes. However, this time, the company had to defend itself in a public trial with Diaz. Apart from the one time the company had to pay a $1 million award in May after losing a case with another ex-worker, the company has always won its workplace arbitrations.
The outcome from this trial has the potential to bolster shareholder activists who have been pushing the company’s board — albeit unsuccessfully — to be more transparent about its use of arbitration to resolve complaints pertaining to sexual harassment as well as racial discrimination. The board has been pushing investors to vote down such a proposal at a shareholder meeting scheduled for Oct. 7. Tesla continues to adopt mandatory arbitration at a time when numerous big Silicon Valley companies, including Alphabet Inc. and Uber Technologies Inc., have given up on the use of mandatory arbitration.
Tesla and its attorney, Tracey Kennedy, didn’t immediately respond to requests for comment.
Tesla’s attorney Tracey Kennedy argued that the company had never intended to neglect the rights and safety of African-American employees hired through a staffing agency. Tesla further argued that all the incidents reported by Diaz had been investigated and resolved.
Kennedy delivered her closing argument to the jury by saying, “Mr. Diaz’s story simply doesn’t make sense” as he had actively encouraged his children to take up employment at Tesla. She said that there was no evidence to support Diaz’s claims.
A lawyer for Diaz J. Bernard Alexander III said to the jurors that “as opposed to a zero-tolerance policy, Tesla had a zero-responsibility policy.”
He added that the “n-word” was “pervasive and virtually everywhere”. His closing remarks cited phrases from “The Hill We Climb,” which is a poem by Amanda Gorman, the 23-year-old poet who stirred the nation during the inauguration of President Joe Biden in January. Alexander commented, “Being American” is about going into the past and “how we repair it”.
Diaz’s testimony included him suffering from “sleepless nights” and weight loss as he lost his appetite. He said to the jury, “Some days I would just sit on my stairs and cry”.
As reported by another of Diaz’s attorneys’ Organ, the jury’s award comprises $6.9 million for emotional distress and $130 million in punitive damages.
Organ said, “The jury verdict sends a message to one of the wealthiest companies in the world that it must treat all its employees with dignity and respect,”. He added that he hoped this will allow Tesla to reevaluate its policies so no other black employees at the company would have to go through a similar treatment.
Organ was also one of the lawyers representing Melvin Berry. Berry was a Black former employee who won the $1 million arbitration award after claiming that Tesla had been unable to stop his supervisors at its Fremont plant from addressing him with the “N-word.”
Tesla is currently facing another case with similar accusations. That case is proceeding as a class action in California state court in Oakland.