Back in the autumn of 2021, Owen Diaz made history regarding the racial discrimination that he survived, in 2015, as an elevator operator at Tesla’s factory in Freemont, California. Diaz was repeatedly called the N-word during his few months working for the electric carmaker. Jurors saw the racist drawings that once adorned the building’s walls. They heard testimony about supervisors who did very little to intervene. They were told during the closing argument that someone needed to teach this corporation a lesson. And the jurors delivered: $4.5 million in past compensatory damages, $2.4 million in future compensatory damages, and $130 million in punitive damages, believed to be the largest race harassment verdict in American history.
Soon thereafter, Musk replaced his trial team with new lawyers from Quinn Emanuel, including superstar appellate attorney Kathleen Sullivan, who successfully convinced U.S. District Court Judge William Orrick that the $137 million wouldn’t hold up under a Supreme Court precedent that imposed constitutional limitations on punitive damages. Last April, the trial judge made Diaz a $15 million offer. Orrick concluded that this man’s emotional harm from being called the n-word only supported $1.5 million in compensatory damages, and that the Constitution would only permit a punitive damages award that was nine times the amount of compensatory damages. The judge denied Tesla’s motion for a new trial on the condition that Diaz accepted this lesser amount. A couple months later, however, Diaz rejected the offer, thereby sending the case to a new trial.
This surprising decision confounded me. Given the judge’s view that the Constitution wouldn’t tolerate an excessive punitive damages award, I couldn’t grasp what Diaz hoped to achieve by a second trial. At best, I imagined, he’d repeat his early success only to once again have a judge step in. So I got on the phone with Diaz’s attorney, Larry Organ, who not surprisingly, had a much different assessment of the situation.