Tesla Settles Discrimination Suit With Former Factory Worker

Tesla and a former employee have agreed to settle a closely watched lawsuit that cast a harsh light on the carmaker’s treatment of Black workers.

Lawyers for Tesla and for Owen Diaz, who worked at the company’s factory in Fremont, Calif., did not disclose the terms of the settlement in a legal filing on Friday. “The parties have reached an amicable resolution of their disputes,” Lawrence A. Organ, a lawyer for Mr. Diaz, said in an email, adding that he could not comment further.

Last year, a jury in federal court in San Francisco awarded Mr. Diaz $3.2 million after he presented evidence that he had been subject to repeated harassment by supervisors at Tesla’s factory, including being addressed with a racial slur more than 30 times. A supervisor drew a racist caricature near his work station, according to testimony in the case.

Tesla did little to discipline the supervisors or address pervasive racism at the factory, the jury found.

Mr. Diaz appealed, saying that $3.2 million was insufficient compensation for the psychological damage he suffered, including loss of sleep, depression and damaged relations with his wife and son. Mr. Diaz’s lawyers also argued that the award was not sufficient to punish Tesla for failing to stop the harassment.

It was the second trial in the case. In the first, in 2021, jurors awarded Mr. Diaz $137 million, but a judge ruled that the amount was excessive. The second trial last year dealt solely with the amount Mr. Diaz should receive in damages.

In a decision last year, Judge William H. Orrick of U.S. District Court said, “Tesla’s conduct was reprehensible and repeated, and it failed to take responsibility or change its ways during Diaz’s time at the company.” But he ruled that $3.2 million was adequate compensation. Mr. Diaz’s appeal of that ruling was pending when he and Tesla agreed to settle.

In court filings, Tesla lawyers denied that the company had failed to respond to the harassment. “Tesla had clear official policies barring racially discriminatory harassment and did not condone, permit, allow or tolerate such conduct,” Tesla lawyers wrote last year. They did not respond to a request for comment Friday.