In October 2021, a California federal jury awarded $137 million to a former contract employee who worked for Tesla. The jury found Tesla liable for creating a racially hostile work environment and awarded the employee $6.9 million in compensatory damages, as well as $130 million in punitive damages. Based on current law, we anticipated that this award would be reduced by the judge or through a subsequent appeal to the Ninth Circuit Court of Appeals. Tesla made a motion for judgment as a matter of law that it was not liable, and in the alternative, it made separate motions for a new trial and to reduce the number of damages.
On April 13, 2022, Judge William Orrick of the United States District Court for the Northern District of California denied Tesla’s motions for judgment as a matter of law and for a new trial. Judge Orrick, as expected, partially granted Tesla’s motion for a reduction of damages.
Judge Orrick reduced the compensatory damages awarded to $1.5 million and the punitive damages award to $13.5 million. This reduction dropped the total award from $137 million to $15 million. Interestingly enough, due to the Federal Rules of Civil Procedure governing the case, the employee can either accept this reduction or make the election to proceed with a new trial solely on the issue of damages. Judge Orrick gave the employee 30 days to accept or reject the remittitur.