$137 Million Racial Harassment Verdict Against Tesla Slashed By New Jury!

• Jurisdiction: California,United States,Federal
• Law Firm: Proskauer Rose LLP
• Subject Matter: Employment and HR, Litigation, Mediation & Arbitration, Discrimination, Disability & Sexual Harassment, Arbitration & Dispute Resolution
• Author: Mr Anthony Oncidi and Morgan J. Peterson
• Published date: 21 April 2023

An astronomical $137 million jury verdict against Tesla has again been reduced, for a second (and potentially final) time. Last Monday, following a five-day trial on damages, a federal court jury awarded Owen Diaz, a former Tesla elevator operator, $175,000 in emotional distress damages and $3 million in punitive damages, totaling nearly $3.2 million'almost $134 million shy of the award he originally obtained in 2021.

We covered the original verdict in Diaz v. Tesla, No. 3:17-cv-06748-WHO (N.D. Cal. 2021) here, in which a San Francisco jury awarded Diaz $130 million in punitive damages and $6.9 million in emotional distress damages for racial harassment he suffered at a Tesla factory in Fremont, California. Almost a year ago (reported here), the federal judge in the case ruled that the jury's verdict was excessive and gave Diaz a choice: Either accept a reduced award of $15 million in damages, or face a new damages trial before a different jury. Diaz chose the latter'a decision he may now regret.

Although the reduced damages award must be welcome news to Tesla, it may still be too high in that the punitive damages are more than 17 times the amount of compensatory damages, which therefore exceed constitutional limits. For some time now, we've called for updated standard jury instructions that inform juries before they render a verdict about the strict constitutional limits that apply to punitive damage awards in civil cases such as this. See, e.g., State Farm Mut. Auto. Ins. Co. v. Campbell, 538 U.S. 408, 424-25 (2003) ("Our jurisprudence and the principles it has now established demonstrate [that] few awards exceeding a single-digit ratio between punitive and compensatory damages, to a significant degree, will satisfy due process"); Roby v. McKesson Corp., 47 Cal. 4th 686, 719 (2009) (a one-to-one punitive to compensatory damages ratio is most appropriate because of the low level of reprehensibility and the substantial amount of the compensatory damages award); Contreras-Velasquez v. Family Health Ctrs. of San. Diego, Inc., 62 Cal. App. 5th 88, 108 (2021) ("When compensatory damages are substantial, then a lesser ratio, perhaps only equal to compensatory damages, can reach the outermost limit of the due process guarantee. A lesser...