Tesla Reportedly Faces Fresh Racism Lawsuit By Employee Whose $137M Verdict Was Slashed

Elon Musk-led Tesla Inc. TSLA faces another trial by a Black worker who was awarded $137 million in damages for racism earlier.

What Happened: The trial has begun in San Francisco on Monday to establish how much money Tesla must pay Owen Diaz, an elevator operator, reported Reuters.

Diaz’s lawyer reportedly said during the opening statements that racist slurs, graffiti and threats faced by the Plaintiff were tantamount to the “plantation mentality” prevalent at Tesla’s Fremont, California factory.

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“You will conclude that Tesla's conduct...is a conscious decision not to protect African American employees inside their workplace,” said Bernard Alexander, the lawyer for Diaz, according to the report.

Tesla's lawyer, Alex Spiro, said while any racist conduct at the factory was indefensible, Diaz was exaggerating claims and couldn’t prove that he suffered psychological damages which would warrant monetary damages, reported Reuters.

Why It Matters: Employment discrimination cases mostly don’t yield verdicts of more than $1 million, while the U.S. Supreme Court has stated that punitive damages should mostly not be more than 10 times compensatory damages, noted Reuters.

In January, U.S. District Judge William Orrick in San Francisco lowered the awarded damages from $137 million to $1.5 million for compensatory damages and $13.5 million in punitive damages, according to a prior report.

A federal jury ordered the $137 million payout in October 2022. Diaz worked as an elevator operator at Fremont between 2015 and 2016.

Price Action: On Monday, Tesla shares closed 0.7% higher at $191.81 in the regular session and rose 0.6% in the after-hours trading, according to data from Benzinga Pro.

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