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 ratio may also be warranted where the compensatory damages award appears to contain a punitive element—for example, a substantial award of emotional distress damages”) (internal quotations omitted).

 

While Monday’s verdict may seem like a comparative win for Tesla as measured against the 2021 verdict, which was over 40 times higher, it underscores the preposterous unpredictability—and lengthy duration—of the traditional litigation process for cases like this.

 

Even before the original $137 million verdict two years ago, another Black employee sued Tesla for similarly offensive racial harassment that occurred at the same location. However, that employee (unlike Diaz) had signed an arbitration agreement. The arbitrator ruled in the employee’s favor and awarded him $1 million in damages, which was obviously still a very large amount of money, but that amount pales in comparison to the $137 million or even the $3.2 million jury verdicts that Diaz obtained in his jury trials. 

Employers and employees alike can reap the time and cost-saving benefits of arbitration agreements (as we’ve written about here), which remain enforceable in California despite the persistent efforts of certain politicians and courts to outlaw arbitration. We will continue to monitor and provide updates on developments in Diaz v. Tesla and other major California jury verdicts involving employers in the days to come.  

Print:
Email this postTweet this postLike this postShare this post on LinkedIn
Photo of Tony Oncidi Tony Oncidi

Anthony J. Oncidi is the co-chair of the Labor & Employment Law Department and heads the West Coast Labor & Employment group in the firm’s Los Angeles office.

Tony represents employers and management in all aspects of labor relations and employment law, including…

Anthony J. Oncidi is the co-chair of the Labor & Employment Law Department and heads the West Coast Labor & Employment group in the firm’s 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. A substantial portion of Tony’s practice involves the defense of employers in large class actions, employment discrimination, harassment and wrongful termination litigation in state and federal court as well as arbitration proceedings, including FINRA matters.

Tony is recognized as a leading lawyer by such highly respected publications and organizations as the Los Angeles Daily JournalThe Hollywood Reporter, and Chambers USA, which gives him the highest possible rating (“Band 1”) for Labor & Employment.  According to Chambers USA, clients say Tony is “brilliant at what he does… He is even keeled, has a high emotional IQ, is a great legal writer and orator, and never gives up.” Other clients report:  “Tony has an outstanding reputation” and he is “smart, cost effective and appropriately aggressive.” Tony is hailed as “outstanding,” particularly for his “ability to merge top-shelf lawyerly advice with pragmatic business acumen.” He is highly respected in the industry, with other commentators lauding him as a “phenomenal strategist” and “one of the top employment litigators in the country.”

“Tony is the author of the treatise titled Employment Discrimination Depositions (Juris Pub’g 2020; www.jurispub.com), co-author of Proskauer on Privacy (PLI 2020), and, since 1990, has been a regular columnist for the official publication of the Labor and Employment Law Section of the State Bar of California and the Los Angeles Daily Journal.

Tony has been a featured guest on Fox 11 News and CBS News in Los Angeles. He has been interviewed and quoted by leading national media outlets such as The National Law JournalBloomberg News, The New York Times, and Newsweek and Time magazines. Tony is a frequent speaker on employment law topics for large and small groups of employers and their counsel, including the Society for Human Resource Management (“SHRM”), PIHRA, the National CLE Conference, National Business Institute, the Employment Round Table of Southern California (Board Member), the Council on Education in Management, the Institute for Corporate Counsel, the State Bar of California, the California Continuing Education of the Bar Program and the Los Angeles and Beverly Hills Bar Associations. He has testified as an expert witness regarding wage and hour issues as well as the California Fair Employment and Housing Act and has served as a faculty member of the National Employment Law Institute. He has served as an arbitrator in an employment discrimination matter.

Tony is an appointed Hearing Examiner for the Los Angeles Police Commission Board of Rights and has served as an Adjunct Professor of Law and a guest lecturer at USC Law School and a guest lecturer at UCLA Law School.

Photo of Morgan Peterson Morgan Peterson

Morgan Peterson is an associate in the Labor & Employment Department and a member of the Employment Litigation & Arbitration Group. She is a member of the Wage and Hour and the Class and Collective Action practice groups.

Morgan assists clients across a…

Morgan Peterson is an associate in the Labor & Employment Department and a member of the Employment Litigation & Arbitration Group. She is a member of the Wage and Hour and the Class and Collective Action practice groups.

Morgan assists clients across a variety of industries with litigations and arbitrations relating to wrongful termination, discrimination, harassment, retaliation, wage and hour, and whistleblower matters in both the single plaintiff and class and collective action contexts. She also counsels employers on a diverse range of workplace issues and their policy and handbook development. Morgan maintains an active pro bono practice representing individuals in immigration matters and providing employment counseling to non-profit organizations.

Morgan earned her J.D. from U.C. Irvine School of Law, where she was an Executive Editor of the UC Irvine Law Review and spent four semesters working in UCI’s Civil Rights Litigation Clinic. Morgan also served as a judicial extern for the Honorable John D. Early in the Central District of California. Morgan received her B.A., cum laude, from Tufts University.