Appeals court allows Tesla employees’ discrimination claims to go to trial

Michael Rubin, a lawyer for the two plaintiffs, said it was the first appellate decision in California to allow individuals to seek a public injunction against racial discrimination in the workplace.

Minority employees from a Tesla plant in California are one step closer to forcing Tesla to acknowledge and take action to end discrimination after an appeals court ruled they can head to trial with their lawsuit against the company.

According to the Houston Chronicle, the First District Court of Appeal in San Francisco issued a decision on Wednesday allowing two employees to proceed with damage claims rather than submit to arbitration regarding how they were treated while working as contractors at Tesla in 2016 and 2017 before being hired as employees.

The court also determined that the employees could pursue a public injunction, an order which, if granted, would compel Tesla to alter its procedures for all employees, not just the two plaintiffs.

Tesla Fremont factory
Tesla cars sit parked in a lot at the Tesla factory in Fremont, California. An appeals court ruled Wednesday that two employees at the factory can move forward with their lawsuit against the company rather than going through an arbitrator. (Photo: Justin Sullivan/Getty Images)

In the 3-0 ruling, Justice Mark Simons said the injunction the employees sought would have effects beyond their relations with Tesla that they had agreed to arbitrate.

He highlighted a state Supreme Court decision from 2017 that allowed an individual to request a public injunction against a business because it was engaging in false advertising and breaking the law. According to Simons, like false advertising, employment discrimination “harms the public at large.”

“An injunction against further employment discrimination by (Tesla) would inure to the benefit of not only current Tesla employees, but to the benefit of their families and their communities, as well as to the benefit of future Tesla applicants and employees,” Simons said, according to the Chronicle.

Michael Rubin, a lawyer for the two employees, said it was the first appellate decision in California to allow individuals to seek a public injunction against racial discrimination in the workplace.

Tesla, which could appeal the decision to the state Supreme Court, denies the claims made by the two employees. The electric car manufacturer referenced a U.S. Supreme Court decision in June in a case involving a different company that prohibited those employees from implementing a California law to band together to sue their employer on behalf of the state for alleged violation of California labor laws. But the lawsuit against Tesla did not rely on that law, the Chronicle reported.

Employees at Tesla, owned by billionaire Elon Musk, have long claimed that racial discrimination is tolerated and encouraged at the company’s Fremont plant.

Owen Diaz was awarded over $137 million in damages in April 2021 after he claimed he was regularly subjected to racial slurs throughout his brief tenure as an elevator operator. A federal judge initially reduced the amount to $15 million, but Diaz chose to have a second trial, set to begin in April.

Another attorney for the employees, Bryan Schwartz, claimed that Tesla has thousands of individuals in precisely the same circumstances as Diaz. He said that current Black employees continue to deal with racial slurs and racist graffiti — such as swastikas, nooses, and Ku Klux Klan emblems — and are given the poorest and lowest-level tasks by an all-white management team.

“Through a public injunction, we will change that factory,” Schwartz said, according the Chronicle. “Elon Musk and his hench-people will no longer be able to simply run roughshod over workers.”

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