Tesla is back in court this week to defend itself against allegations from a Black former worker who claimed the automaker’s Fremont factory is rife with racial discrimination and harassment. Tesla and the plaintiff, Owen Diaz, are scheduled to appear in U.S. District Court in San Francisco this week after jury selection begins Monday.

Diaz is seeking compensatory and punitive damages after alleging that colleagues repeatedly called him racist slurs, drew racist caricatures and swastikas, and generally presented a hostile work environment in the nine months between 2015 and 2016 that he worked as an elevator operator at the plant. Tesla management, he claims, did nothing to halt the abuse. 

The new trial comes after Diaz and his lawyers rejected a $15 million payout last June, which Judge William Orrick reduced from a jury-awarded $137 million damages. Orrick had slashed the compensatory damages from $6.9 million to $1.5 million, as well as punitive damages from $130 million to $13.5 million, saying at the time that the jury award was excessive.

Orrick also said he couldn’t find a controlling question of law to justify an immediate appeal of the reduced award, and that allowing for one would further delay a case that is already five years old. Diaz’s lawyers said the payout was unjust and wouldn’t deter future misconduct by Tesla.

Going back to court is a gamble for Diaz, who risks the possibility of even lower damages as a result of the new trial. Helen Rella, head of the employment law department at law firm Wilk Auslander, previously told TechCrunch that the most likely outcome, however, is for Diaz to be awarded something in between the $15 million and $137 million award.

Tesla has historically denied any wrongdoing. The company disbanded its press office in 2020 and could not be reached for comment.

The rehashing of Diaz’s case comes as Tesla continues to fight against California’s Civil Rights Department (CRD) in a separate racial bias lawsuit. The CRD first sued Tesla in February 2022 after receiving allegations that the automaker’s Fremont factory is a racially segregated workplace where Black workers suffer from harassment, unequal pay and a hostile work environment. Earlier this month, a judge ruled that the CRD must provide Tesla with details of the investigation it conducted prior to filing suit against the automaker. If the CRD wasn’t thorough enough in its investigations, Tesla might be able to have certain claims dismissed.


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