Workers assemble cars on the line at Tesla’s Fremont factory. David Butow (Photo by David Butow/Corbis via Getty Images)

David Butov | Corbis News | Getty Images

Manufacturer of electric vehicles Tesla settled a racial discrimination lawsuit in which a federal jury previously awarded $3.2 million in damages to Owen Diaz, a black man who worked as an elevator operator at its Fremont, California factory in 2015.

Attorney Lawrence Organ of the California Civil Rights Law Group, who represented Diaz, told CNBC via email: “The parties have reached an amicable resolution of their disputes. The terms of the settlement are confidential and we will have no further comment.”

The same firm is representing current and former Tesla employees in a proposed class-action lawsuit, Marcus Vaughn v. Tesla Inc., alleging that racial discrimination and harassment of black workers continued at the automaker. Diaz is not a party to this litigation.

Organ told CNBC by phone on Friday, “It took a lot of courage for Owen Dias to take on a company the size of Tesla. Civil rights laws only work if people are willing to take such risks. Although the legal chapter of his life is over, there is still a lot of work for Tesla.”

He said: “When I started this case, I assumed that the behavior would stop if Elon Musk made a statement and committed to his employees that this would not be tolerated. We haven’t heard that after seven years of litigation, a nine-figure verdict, then a seven-figure verdict. Why doesn’t he stop this behavior? That’s what doesn’t make sense to me. Tesla should be the factory of the future. But this behavior is from the Jim Crow past. “

The US Equal Employment Opportunity Commission is also suing Tesla, accusing the automaker of violating “federal law by tolerating widespread and ongoing racial harassment of its black employees and by subjecting some of those workers to retaliation for standing up to the harassment.”

Tesla called EECO’s allegations “a false narrative that ignores Tesla’s equal employment opportunity experience.”

The case of Diaz

In 2023, as CNBC previously reported, Diaz testified in federal court in San Francisco that his colleagues at Tesla regularly used racist epithets to denigrate him and other black workers, made him feel physically unsafe in factory, he was told to “go back to Africa” ​​and left racist graffiti in the toilets.

Diaz’s colleagues at Tesla also left a racist drawing in his workplace, he said. The drawing was a rudimentary reference to Inki the Caveman, a cartoon from the 1950s whose main character is a black boy depicted with big lips, wearing a bandage around his waist, earrings and a bone through his hair.

During his ordeal, Diaz said he encouraged his son to work at Tesla, but would later regret the referral because his son was also exposed to a racially hostile workplace.

In his first trial, juries awarded Diaz a much larger verdict, including punitive damages, of $137 million after he and his lawyers convinced a jury that he suffered serious racial discrimination and the company failed to take all reasonable steps to stop and prevent it and – further violations of civil rights.

Diaz and Tesla asked for a retrial to determine damages after Judge William H. Orrick reduced the jury’s award to $15 million. Diaz again prevailed, securing the $3.2 million verdict.

Elon Musk on X

The settlement with Diaz comes as Tesla CEO Elon Musk faces widespread criticism for his handling of hate speech at X, formerly Twitter, which he owns and runs as CTO.

Like NBC News reported recentlyMusk shared unconfirmed claims of cannibalism in Haiti this month on X and shared posts slandering Haitian migrants as likely cannibals.

A progressive news organization MotherJones also reported that “the tech billionaire retweets famous supporters of racial scientists on his platform” and “spreads misinformation about the intelligence and physiology of racial minorities.”

Tesla, which does not have a traditional public relations office in North America, did not respond to a request for comment.