Tesla Inc. may end up paying only about half of the stunning $137 million verdict a jury awarded a former contractor over racism at one of its auto plants, if it appeals.
Billionaire Elon Musk’s electric automaker has been ordered to pay punitive damages almost 20 times as large as the actual damages former contract worker Owen Diaz won—well in excess of a typical punishment, according to law professor Michael Selmi.
Punitive damages are generally calculated as 9 to 1 or 10 to 1 when compared to actual damages, said Arizona State University’s Selmi. Diaz was awarded $6.9 million for emotional distress, but an appeals court could very well cut the $137 million award in half, Selmi said.
While on rare occasion high-multiple damages have been upheld, the Tesla award is “unlikely to survive a challenge,” Selmi said. The parties could also settle rather than risk an appeal, he said.
But regardless of the final number, the jury still sent a strong message to the company that it has to take racial harassment seriously. And that was the intent, according to a member of the jury panel in San Francisco.
“They claim to have a zero tolerance policy, but suspended rather than fired, and ignored rather than rectified or retrained their employees on proper prevention,” said the juror, who asked not to be identified. Eight jurors delivered the verdict Monday about four hours after the trial ended.
Tesla has been dogged by allegations of racism at its auto plant in Fremont, California, for years, but few cases ever make it to trial because most employees are bound by arbitration agreements. The rare verdict in the Diaz case was possible because he was a contract worker and never signed an arbitration agreement with Tesla.
The jury found that Diaz was subjected to a racially hostile work environment. The use of the “n-word” was pervasive and virtually everywhere at Fremont factory, J. Bernard Alexander III, a lawyer for Diaz, told jurors.
Source : time