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Black Tesla Ex-Worker Seeks Third Trial in Factory Racism Fight After Initial $137M Award Cut to $15M

By Malathi Nayak

A Black ex-contract worker at Tesla Inc. who was awarded $3.2 million in a second trial over the company’s failure to protect him from racial abuse now wants another do-over, claiming that “highly damaging” attacks on his character and credibility by the electric-vehicle maker’s attorney made the proceeding unfair.

Owen Diaz, right, and Demetric Diaz.

Tesla, meanwhile, is urging a federal judge to reduce what it must pay Owen Diaz by 45%, arguing that the punitive damages against the company are “manifestly erroneous.”

Diaz, who was an elevator operator for Tesla about seven years ago, won a $137 million jury verdict in 2021 over allegations that he was frequently subject to racist slurs and other mistreatment at the company’s factory in Fremont, California. The award was among the highest ever for an individual suing over discrimination in the US.

But Diaz refused to accept a judge’s finding that the most he was entitled to was $15 million and opted for a retrial on damages, which led to a result last month that was 98% smaller than the original verdict.

Tesla’s ‘Staggering’ Tab for Racism Suit Is Slashed by 98%

In a court filing late Tuesday, lawyers for Diaz portrayed the week-long retrial in San Francisco as a travesty. They argued that Tesla’s attorney, Alex Spiro, called them “phony civil rights lawyers” in front of the jury and repeatedly disparaged Diaz, falsely portraying him as “a racist and misogynist who hurled ethnic slurs against ‘dumb Mexicans’ and sexually harassed multiple women.”

They also alleged that Spiro violated the trial’s ground rules by introducing prohibited evidence, improperly questioning Diaz’s witnesses, misstating the law to the jury and wrongly insinuating that Tesla had already compensated Diaz.

The judge’s instructions to the jury to set the record straight ended up “highlighting Tesla’s poisonous messaging,” Diaz’s attorney Michael Rubin wrote in a 43-page filing.

“There was no meaningful way to wipe Tesla’s improper accusations and suggestions from the jury’s consciousness,” he said.

In his request to US District Judge William Orrick to order a new trial, Rubin said Tesla’s “misconduct” is the only way to explain why jurors awarded just a “tiny fraction” of the 2021 damages when the underlying facts of the case hadn’t changed.

Tesla and Spiro, who has become Elon Musk’s go-to lawyer in high-profile matters, didn’t immediately respond to requests for comment.

The company argued in its own filing Tuesday that the jury’s award of $3 million in punitive damages runs afoul of constitutional principles because it’s disproportionate to Diaz’s relatively modest compensatory damages. Tesla made a similar argument to knock down the original $137 million verdict. 

Tesla Racism Case Award Cut to $15 Million from $137 Million

By Tesla’s calculations, Diaz should get no more than $1.75 million in total damages.

In Spiro’s closing argument at the trial, the lawyer told jurors that if they think a witness deliberately testified untruthfully, they don’t have to believe anything he said. 

Spiro said Diaz was caught in numerous lies, including his explanation that after leaving Tesla he went to work as a bus driver to escape the factory setting. In fact, he went to work in another factory for Coca Cola, Spiro said.

Diaz filed his lawsuit in 2017. Tesla has faced years of complaints from Black workers that managers at the factory turned a blind eye to the commonplace use of racial slurs on the assembly line and were slow to clean up graffiti with swastikas and other hate symbols scrawled in common areas. 

The case is Diaz v. Tesla Inc., 17-cv-06748, US District Court, Northern District of California (San Francisco).

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