Tesla probably won't have to pay the full $137 million to an ex-worker who won a racial harassment case, but it's still a big blow to the company

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Tesla probably won't have to pay the full $137 million to an ex-worker who won a racial harassment case, but it's still a big blow to the company
Workers at Tesla's Fremont factory. David Butow/Corbis News via Getty Images
  • Tesla was ordered to pay $137 million to a former worker in a racial harassment lawsuit on Tuesday.
  • Two employment attorneys told Insider the figure will likely be cut if Tesla appeals.
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Tesla was ordered by a jury in San Francisco on Tuesday to pay $137 million to Owen Diaz, a man who worked as an elevator operator in its Fremont factory in 2015. Diaz said that while working as an agency staffer, he was racially harassed.

The jury decided on $130 million in punitive damages, plus $6.9 million for emotional distress - but two employment lawyers said Tesla probably won't have to pay Diaz the full amount.

"Despite the shock value associated with this large jury verdict, it is unlikely that this amount will withstand judicial scrutiny, and Tesla will likely not have to pay the full amount awarded by the jury," Jessica Roe, an attorney at Roe Law Group, told Insider.

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She said many laws set maximum damages caps for specific claims. "Tesla will likely argue that the $130 million awarded in punitive damages far exceeds the damage caps in play here," Roe said.

Helene Hechtkopf, partner at Hoguet Newman Regal & Kenney, also told Insider the final payout to Diaz is likely to be cut down. Arizona State University law professor Michael Selmi told Bloomberg the sum could be cut by as much as 50%.

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"Based on the size of the award, the jury was likely attempting to send a message to Tesla that what happened here was not OK," Roe said.

Tesla's response to Tuesday's verdict indicates it is ready to fight. The company's VP of people, Valerie Capers Workman, published a blog post in which she appeared to try and undermine the jury's verdict using details from the case.

One example of a detail presented by Workman was that Diaz had recommended to his son and daughter that they came to work with him at Tesla.

Tesla's reaction was "very unusual," Hechtkopf told Insider.

She said: "The jury is the ultimate 'finder of fact' in a case like this - and the jury found that the facts support a finding of liability. So Tesla's internal view of the facts is just not relevant at this point."

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Many large companies would have just published a generic statement of their intent to appeal, she added.

Roe did not view Tesla's response as particularly extraordinary, however, and said it signaled that the company will likely appeal.

In an email to Insider, Diaz's attorney J. Bernard Alexander III said: "Tesla's response was to thumb its nose at the verdict, despite a unanimous jury finding against them and a substantial punitive damage award."

He added: "Tesla's tone-deaf response to the jury verdict is precisely the tone that resulted in the punitive damage award."

Tesla did not respond when contacted by Insider for comment and has not yet issued a statement on whether it will appeal.

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Color of Change, a nonprofit civil rights advocacy group, said the blog post was an example of Tesla failing Black employees.

Jade Magnus Ogunnaike, the group's senior campaigns director, told Insider: "Tesla's attempt to discredit and undermine Owen Diaz's experiences of racism and discrimination is typical behavior from a billion-dollar company that has continuously failed to support its Black employees and contracted workers."

"Tesla's leadership has refused to take responsibility for the company's anti-Black and hostile work environment," Ogunnaike said.

There are countless Black employees who have experiences similar to Diaz, according to Ogunnaike. She added that their "voices go unheard because corporations like Tesla use a two-tiered system and hire contracted workers who do not receive the same benefits or protections as full-time staff."

Diaz is not the only Black worker to have brought a racial harassment lawsuit against Tesla. In August, the company was ordered to pay $1 million to a Black former employee, who alleged he was called racial slurs in 2015.

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Even if Tesla successfully gets Diaz's payout cut, the verdict has been damaging for the company. It was cited by investors on its annual shareholder call on Thursday as a reason why its employment practices need greater transparency.

"After this week's headlines and many other employee allegations of racial discrimination, we, as investors, need a look under the hood," Dr. Kristin Hull, CEO at activist shareholder Nia Impact Capital, said on the call.

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