Tesla settles discrimination lawsuit with former factory worker

Tesla and a former employee have agreed to settle a closely watched lawsuit that shines a harsh light on the automaker’s treatment of black employees.

Lawyers for Tesla and Owen Diaz, who worked at the company’s factory in Fremont, California, did not disclose the terms of the settlement in a legal filing Friday. “The parties have reached an amicable resolution to their disputes,” Lawrence A. Organ, a lawyer for Mr. Diaz, said in an email, adding that he could not comment further.

Last year, a federal court jury in San Francisco awarded Mr. Diaz $3.2 million after he presented evidence that he was repeatedly harassed by supervisors at Tesla’s factory, including racial slurs more than 30 times. A supervisor drew a racist caricature near his workplace, according to testimony in the case.

Tesla did little to discipline regulators or address widespread racism at the factory, the jury found.

Mr Diaz appealed, saying $3.2 million was insufficient compensation for the psychological damage he suffered, including loss of sleep, depression and damaged relationships with his wife and son. Mr. Diaz’s lawyers also argued that the award was not enough to punish Tesla for failing to stop the harassment.

It was the second trial in this case. In the first time, in 2021, jurors awarded Mr. Diaz $137 million, but a judge ruled the amount was excessive. The second trial last year was exclusively about the amount Mr. Diaz should receive compensation.

U.S. District Court Judge William H. Orrick said in a ruling last year: “Tesla’s conduct was reprehensible and repetitive, and the company failed to take responsibility or change its conduct during Diaz’s time at the company.” But he ruled that $3.2 million was adequate compensation. Mr. Diaz’s appeal of that ruling was pending when he and Tesla agreed to settle.

In court filings, Tesla’s lawyers denied that the company had failed to respond to the harassment. “Tesla had a clear official policy prohibiting racially discriminatory harassment and did not tolerate such behavior,” Tesla lawyers wrote last year. They did not respond to a request for comment Friday.