July 3, 2022

Volume XII, Number 184

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June 30, 2022

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Judge Reduces $137 Million Race Harassment Verdict Against Tesla to $15 Million

A federal court judge pared down last year’s jaw-dropping $137 million damages award against Tesla in a racial bias lawsuit.  As covered previously here, a San Francisco federal court jury awarded $6.9 million in emotional distress damages and $130 million in punitive damages to a Black former elevator operator who worked at Tesla’s Fremont facility for approximately one year before quitting his employment in 2016.  On April 13, 2022, the judge granted Tesla’s motion for a reduction in the amount of damages in part and denied Tesla’s motion for judgment as a matter of law that it is not liable.  The judge explained in his order: “Great deference is owed to the jury’s verdict, but after careful review of the record, I conclude that the award of compensatory damages was excessive.”

Specifically, the judge reduced the emotional distress damages to $1.5 million, the highest award supported by the evidence, as compared to the $300,000 for which Tesla advocated.  With an eye toward United States Supreme Court precedent imposing constitutional limitations on punitive damages awards, the judge reduced the punitive damages to $13.5 million—nine times the amount of compensatory damages—as opposed to the one-to-one ratio Tesla proposed.  While the judge described the jury’s award as “unconstitutionally large,” he rejected the argument that no punitive damages are warranted.  The court granted the highest possible ratio of punitive damages (9:1) under the United States Supreme Court’s guidance that it is unlikely awards exceeding a single-digit ratio between punitive and compensatory damages will satisfy due process.

The former Tesla employee may not accept the reduced damages and instead request a new trial on damages – and Tesla presumably will appeal to the Ninth Circuit as well.  As we’ve noted before herehere, and here, this case well exemplifies the advantages of arbitration for employers and employees alike—arbitration offers increased speed, finality, cost-efficiency, and predictability, which are all absent in a jury trial like this one.  We will continue to monitor this case and provide any relevant updates.

© 2022 Proskauer Rose LLP. National Law Review, Volume XII, Number 109
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About this Author

Anthony J Oncidi, Employment Attorney, Proskauer Rose Law Firm
Partner

Anthony J. Oncidi heads the Labor & Employment Law Group in the Los Angeles office. Tony represents employers and management in all aspects of labor relations and employment law, including litigation and preventive counseling, wage and hour matters, including class actions, wrongful termination, employee discipline, Title VII and the California Fair Employment and Housing Act, executive employment contract disputes, sexual harassment training and investigations, workplace violence, drug testing and privacy issues, Sarbanes-Oxley claims and employee raiding and trade secret protection....

310-284-5690
Law Clerk

Michelle Lappen is a law clerk in the Labor & Employment Department. She earned her J.D. from Columbia Law School, where she was an articles and submissions editor for the Columbia Journal of Law & the Arts. During law school, Michelle was a teaching fellow for the Advanced Negotiation Workshop.

310-284-4564
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