Court of Appeal Rejects Arbitration Challenges to Class Action Lawsuit Against Tesla

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Court of Appeal Rejects Arbitration Challenges to Class Action Lawsuit Against Tesla

Court of Appeal Rejects Arbitration Challenges to Class Action Lawsuit Against Tesla


For Immediate Release: January 4, 2023

Bryan Schwartz, Esq. (510) 444-9300

Larry Organ, Esq. (415) 453-4740

Court of Appeal Rejects Arbitration Challenges to Class Action Lawsuit Against Tesla on Behalf of Current and Former African-American Employees Alleging Rampant Race Harassment, Including N-Word

OAKLAND, CA – Today the Court of Appeal for the First District in California rejected Tesla’s latest attempt to use arbitration to stall the longstanding class action challenging race harassment and discrimination at the company’s Fremont, California factory. The suit alleges that standard operating procedure at the futuristic Tesla factory in Northern California is straight from the worst of America’s past: replete with pre-Civil Rights Era-style race discrimination, African-American workers are routinely called the N-word and other slurs, and experience graffiti including Nazi swastikas. The case asserts that this harassment has continued to be widespread even though multiple prior individual lawsuits exposed the factory’s racist underbelly.

The Court of Appeal decision reiterates that arbitration is a matter of consent, not coercion, and that Tesla cannot compel to arbitration those individuals or claims that were not covered by arbitration agreements. The published decision by the Court of Appeal also enshrines for the first time in California case law that the Fair Employment and Housing Act (FEHA) can be the basis of public injunction claims. Public injunctions are a substantive right which cannot be waived by an arbitration agreement, the Court of Appeal held, applying last year’s U.S. Supreme Court decision in Viking River Cruises, Inc. v. Moriana (2022) 142 S.Ct. 1906.

The Court of Appeal’s rejection of Tesla’s arguments was the second time the Court has weighed in upholding the Alameda County Superior Court’s decisions rejecting the company’s arbitration ploys. The first Court of Appeal decision, in 2019 (A154753), rejected Tesla’s claim that the original named plaintiff, Marcus Vaughn, could be forced into arbitration even though he never signed an arbitration agreement. Today’s Court of Appeal decision (A164053) agreed with the Superior Court that two of the plaintiffs, Monica Chatman and Evie Hall, only agreed to arbitrate claims arising after they became direct Tesla hires, and not race harassment claims relating to their employment at the Tesla factory through staffing agencies before that time.

“Tesla for years has sought to avoid responsibility for the egregious, widespread, disgusting racism at its Fremont factory through one sideshow after the next,” said Bryan Schwartz, one of the co-lead counsel for the Plaintiffs in the class action, along with Larry Organ of California Civil Rights Law Group. “Today’s decision means that it is time for Tesla to face the music,” Schwartz added, concluding, “We will hold Tesla accountable for race harassment and discrimination against thousands of Black workers, and Tesla’s arbitration scheme will not get the company out of it.”

Michael Rubin, of Altshuler Berzon, who argued against Tesla’s appeal on the workers’ behalf, said: “This is an important decision, not only because it allows thousands of Tesla workers to vindicate crucial anti-discrimination rights, but because it is the first appellate decision to recognize how Viking River Cruises protects workers and consumers from having their statutory rights stripped away through an overbroad arbitration agreement.”

The lawsuit is Alameda County Superior Court Docket No. RG17882082.

About the Plaintiff Marcus Vaughn
Plaintiff Marcus Vaughn began working at the Tesla Factory on April 23, 2017 as a General Assembly Associate. Shortly thereafter, employees and supervisors began targeting him for harassment on the basis of his race, including referring to him with the “N-word” on a regular basis. On July 21, 2017, Mr. Vaughn complained in writing to Human Resources and Elon Musk about the hostile work environment. Tesla did not conduct an investigation into Mr. Vaughn’s complaint, nor was he interviewed about his serious allegations of racism at the Tesla Factory. Instead, Tesla terminated Mr. Vaughn on October 31, 2017 for “not having a positive attitude.”

About Bryan Schwartz Law, P.C.
Bryan Schwartz Law, P.C. is dedicated to continuing the struggle for civil rights and equality of employment opportunity and helping Americans from every background to achieve their highest career potential. The firm has recovered tens of millions of dollars for tens of thousands of workers in individual, class, and collective actions involving discrimination and retaliation, harassment, denied disability accommodations, whistleblower reprisal, wage and hour violations, Federal employees’ rights, and severance negotiations.

About California Civil Rights Law Group
The California Civil Rights Law Group, led by prominent trial attorney Larry Organ, is dedicated to furthering the cause of employee civil rights throughout the state. Larry’s firm recently won the landmark $136.9 million race harassment jury verdict against Tesla in Diaz v. Tesla. The legal team has made it its priority to provide help to those who need it the most, and specializes in representing plaintiffs in matters involving race, sex and disability harassment, discrimination, retaliation and wrongful termination.

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