Judge finds Tesla liable to former black worker who alleges bias, but understates his payout

(Reuters) – A federal judge said on Wednesday that Tesla Inc (TSLA.O) He was accountable to a black elevator operator who said the electric car company had ignored racial abuse at the factory where he worked, but cut nearly $137 million from the jury award to $15 million.

U.S. District Judge William Orrick ruled in San Francisco after jurors found last October that Tesla had exposed Owen Diaz to a hostile environment at Tesla’s factory in Fremont, California, allowing and failing to stop the racism he faced.

Diaz, who worked at the plant for nine months in 2015 and 2016, said other employees used racial insults when speaking to him, and wrote swastikas and insults including an “N-word” on bathroom walls. He also said that a supervisor drew a racist cartoon near his work station.

In a 43-page decision, Orrick said the evidence largely supports the jury’s finding that Tesla is responsible for the “profound” emotional damage Diaz has suffered and the “often inappropriate” disciplinary steps the company has taken.

But the judge reduced Diaz’ ​​damages to $1.5 million from the “excessive” $6.9 million the jury awarded, and lowered the punitive damages to $13.5 million from the “unconstitutional” large jury award of $130 million.

Bernard Alexander, Diaz’s attorney, said in an interview that his client intends to appeal the reduced compensation decision.

“We are pleased that the court upheld the jury’s decision that Tesla’s behavior was completely reprehensible,” Alexander said.

“The award of $15 million is substantial but does not come close to reflecting the damage done to Mr. Diaz or denouncing Tesla’s behaviour,” he added.

Tesla and its lawyers did not immediately respond to requests for comment. The company sought to limit compensatory and punitive damages to $300,000 each.

Led by billionaire Elon Musk, Tesla faces similar lawsuits in other lawsuits.

In one such case, the California Department of Employment and Housing alleged in February that black workers at the Fremont plant had been subjected to ongoing harassment, but saw their complaints ignored.

Tesla previously called that lawsuit misleading, and said it had adopted policies to prevent and punish racist behavior.

Compensatory damages are intended to cover actual losses, while punitive damages are intended to punish and deter violations.

Under US Supreme Court precedent, punitive damages must typically be less than 10 times the damages.

Legal experts described Diaz’s original $137 million award as one of the largest ever offered to a single plaintiff alleging workplace discrimination.

The case is Diaz v Tesla Inc et al., US District Court, Northern District of California, No. 17-06748.

(Reporting by Jonathan Stempel and Daniel Wisner in New York) Editing by Christian Schmolinger and Kenneth Maxwell

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