Ex-Tesla factory worker loses bid for new trial in race bias case

By Daniel Wiessner

(Reuters) -A Black former factory worker for Tesla lost his bid on Wednesday for a third trial in his race discrimination lawsuit against the electric carmaker, after a California federal judge rejected his claims that the company's lawyers had engaged in misconduct and tainted his trial.

U.S. District Judge William Orrick in San Francisco in a written order upheld a $3.2 million verdict that a jury awarded to plaintiff Owen Diaz in April, denying his motion for a new trial while also rejecting Tesla's bid to cut the award in half.

The decision staves off another lengthy trial for the electric carmaker but also draws new attention to the case, one of several to allege rampant racial harassment at Tesla's flagship Fremont, California assembly plant. The most recent was filed by U.S. Equal Employment Opportunity Commission last week.

In upholding the verdict, Orrick said it was justified "in light of the endemic racism at the Tesla factory and Tesla’s repeated failure to rectify it."

Diaz, a former elevator operator, claimed he was subjected to daily racist slurs and graffiti and that Tesla ignored his complaints.

His lawyers had argued that Tesla's legal team asked improper questions, baselessly accused a witness of lying and made misleading statements to the jury during a five-day trial earlier this year.

Orrick said any misconduct by the company's lawyers did not so permeate the entire trial to have improperly influenced and prejudiced the jury.

Diaz had been awarded $137 million by a different jury in 2021, but Orrick then ruled that verdict was excessive. The judge ordered the second trial to determine damages after Diaz turned down a lower payout of $15 million.

Tesla did not respond to a request for comment.

Lawrence Organ, a lawyer for Diaz, said he was considering an appeal and expects Tesla to file an appeal seeking to lower the award.

Organ said that despite losing the bid for a new trial, the $3.2 million award was large for a race discrimination case and demonstrated the severity of the harassment alleged by Diaz.

“Courts don’t typically uphold large, multimillion-dollar awards in these cases, so from that standpoint this is clearly a victory for Diaz and for civil rights,” Organ said.

Orrick barred both sides from presenting new evidence or testimony at the second trial, which took place in March.

Diaz claimed Tesla's lawyers violated that directive by questioning him and other witnesses about alleged altercations between Diaz and other workers, which had not come up at the first trial. Diaz denies those incidents took place.

Tesla has said it does not tolerate discrimination and takes complaints from workers seriously.

The company has also denied wrongdoing in several other lawsuits claiming employees at the Fremont plant and other factories and service centers have faced racial or sexual harassment.

Those cases include a proposed class action by Black workers and a lawsuit by a California state agency alleging widespread race discrimination at the Fremont plant, which Tesla claims was politically motivated.

Last week, Tesla was sued by the EEOC, which claims that since 2015 Black factory workers have routinely been subjected to racist slurs and graffiti and retaliated against for complaining about the harassment.

The EEOC sued Tesla under the federal law barring workplace discrimination, which caps damages at $300,000 per worker. The class action and the state agency's lawsuit allege violations of California law, which has no caps.

Diaz had sued Tesla under a different federal law barring race discrimination in contracts, including employment contracts, which also does not cap damages.

(Reporting by Daniel Wiessner in Albany, New York, Editing by Lisa Shumaker, Alexia Garamfalvi, Diane Craft and David Gregorio)