O’Melveny Worldwide

JD Journal: Tesla’s Race Bias Damages Award Sparks Post-Trial Clash

April 7, 2023

A California federal jury’s verdict that awarded US$3.2 million to former Tesla Inc. contractor Owen Diaz, who sued the company for race discrimination and originally sought US$137 million, has raised legal questions over the amounts awarded for punitive damages. Diaz brought the suit more than five years ago and pursued a retrial after a trial judge reduced the original compensatory damages payout to US$1.5 million and punitive damages award to US$13.5 million. In 2004, the US Supreme Court ruled in State Farm v. Campbell that a punitive damages award should have a single-digit ratio to the compensatory damages award. Eric Amdursky, co-chair of O’Melveny & Myers LLP’s Labor & Employment Practice Group, noted that the verdict sends a message to employers that they must take discrimination seriously.

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