Tesla Accused Of ‘Scorched Earth’ Tactics In Race Bias Suits

Tesla Accused Of ‘Scorched Earth’ Tactics In Race Bias Suits

Law360 (January 19, 2024, 10:23 PM EST) — The California Civil Rights Department and a putative class of Black workers accused Tesla on Friday of “obfuscation,” “scorched earth litigation” and intentionally delaying litigation in their years old race bias cases, while Tesla’s counsel argued that the allegations are bogus and any delays are of the plaintiffs’ own making.

The arguments came during an hourslong case management conference for three groups of race discrimination cases pending against Tesla in Oakland, California, before Alameda Superior Court Judge Noël Wise.

The cases include a 2-year-old enforcement action filed by the California Civil Rights Department; a 6-year-old putative class action — dubbed the Vaughn case — filed on behalf of more than 6,000 Black workers at Tesla’s factory in Fremont, California; and roughly 50 individual cases filed by workers who claim they were discriminated against while on the job.

The cases generally accuse Tesla of fostering “rampant racism” at Tesla’s California factories since 2012. The suits claim Black workers have been subjected to constant racial slurs while on the job, with managers and supervisors calling Black workers “monkey boys,” “rats” and the N-word, among other racial slurs, and referring to the workplace as the “slave ship.”

The plaintiffs claim that for months Tesla took no steps to remove racist graffiti, including drawings of swastikas, Confederate flags, the KKK and a noose, in the factories’ bathrooms, workplace benches and on tables and walls, while also refusing to promote Black workers or investigate repeated complaints about a hostile workplace environment. The workers also allege they were subjected to lower pay, harsher punishment and dangerous working conditions, and they claim the alleged violations continue to this day.

Judge Wise only recently began presiding over the cases, taking over for Alameda Superior Court Judge Evelio Grillo, who issued multiple rulings in the litigation, denied Tesla’s dismissal bids and cut most of Tesla’s countersuit against the CRD that alleged Administrative Procedure Act violations.

For his part, Judge Grillo began presiding over the cases in 2022 after Tesla argued that Alameda Superior Court Judge Brad Seligman, who had a lengthy career as a civil rights attorney before taking the bench, couldn’t be impartial.

On Friday, Judge Wise kicked off the hearing, which was also attended by dozens of civil rights attorneys involved in the individual cases, both in person and via Zoom, by explaining that she wanted each side to give her an “overview” of where they believe their litigation stands and when they foresee their disputes going to trial.

Counsel for the CRD and class counsel both said they expect their cases could go to trial sometime next year, but Tesla’s attorneys said the cases should be thrown out before then. Although Judge Wise repeatedly told the attorneys that she wouldn’t be ruling from the bench on any motions, the attorneys made extensive arguments on pending motions and discovery battles.

CRD’s counsel, Alexis McKenna, told the judge that despite filing the CRD’s lawsuit over two years ago, the agency still has “surprisingly little in terms of evidence” from Tesla. She argued that Tesla has engaged in “evasion and obstruction” in discovery, and produced only “self-selected portions of documents.”

“Tesla has treated court-ordered deadlines as though they were optional,” she added.

McKenna also argued that Tesla has issued “excessive, overbroad discovery requests, largely seeking irrelevant and privileged information” from the CRD in order to pursue its remaining bogus counterclaims against the state agency, McKenna said.

Class counsel, Bryan Schwartz, told the judge that currently their motion for class certification is fully briefed and ready to be decided, but he echoed McKenna’s frustration, pointing out that the Vaughn case is more than 6 years old and Tesla’s reaction to the allegations over the years “has been astonishing.”

Schwartz said Tesla has responded to the race bias claims with “scorched earth litigation, obfuscation,” and “deny, deny, deny, and delay, delay, delay.”

“Some of the experiences CRD is experiencing is what we have experienced for six years,” he said, noting Tesla’s repeated unsuccessful appeals, its repeated discovery motions and its attempts to delay the case.

Schwartz noted that since his case was filed, Tesla has also changed defense firms multiple times, while the company has “vastly overplayed its arbitration plan.”

However, Tesla’s counsel, Raymond A. Cardozo of Reed Smith LLP, defended Tesla’s litigation stance and argued that the CRD’s lawsuit is an illegitimate attempt to “smear” Tesla’s reputation.

Cardozo argued that the state agency is in a “turf war” with the U.S. Equal Employment Opportunity Commission, which has filed its own parallel action against Tesla that is pending in federal court. He said that two years ago, CRD “panicked” and filed its suit quickly, without doing a proper investigation or ever actually visiting Tesla’s factory, in violation of the APA, in order to beat the EEOC by suing first.

Cardozo suggested that the EEOC’s race bias suit is merely part of a public dispute between the federal agency and the CRD that stems from the EEOC’s $18 million deal with Activision Blizzard over allegations of sexism, which the CRD tried to block.

Tesla’s counsel also argued that the state agency officials have been hiding behind privileged protections in refusing to produce documents Tesla has requested, and “it’s not a one-sided sheet of evasion of discovery.”

As for the class claims, Tesla’s attorneys argued that the claims by 6,000 workers can’t be decided on a classwide basis, because each plaintiff is subject to individualized questions regarding what each worker was told or saw at the factory, and Tesla submitted more than a hundred declarations by Black workers who said they were proud to work for Tesla, and they never experienced racism while on the job.

But Schwartz argued in response, that Tesla’s evidence of the 150 workers it contacted being “happy campers” was obtained through coercion, noting “the court should give little weight to the declarations, or strike them,” he said.

At the end of the hearing, the judge didn’t rule on any of the pending disputes, but she told the parties to meet and confer regarding a case schedule, and set a March hearing date on the motion for class certification.

During the hearing, Judge Wise also acknowledged that many of the attorneys have been working on the cases for years, and some of them might be frustrated by delays and issues that may arise with switching judges.

“I’m doing my best to get up to speed on all of these cases,” she said. “Feel free to assume I know very little.”

Judge Wise added that she doesn’t know the status of the longest-running case on the state court’s docket, Owen Diaz v. Tesla . A plaintiff attorney quickly pointed out the Diaz case was removed to federal court years ago, tried twice, and resulted in a nearly $137 million judgment that was later reduced to a $3.2 million verdict, which Tesla has since appealed.

The California Civil Rights Department is represented in-house by Siri Thanasombat, Alexis McKenna and Brett Watson.

The proposed class in the Vaughn case is represented by Lawrence Organ and Marqui Hood of California Civil Rights Law Group, Bryan Schwartz of Bryan Schwartz Law PCand Matthew C. Helland of Nichols Kaster PLLP.

Tesla is represented by Thomas E. Hill and Christina T. Tellado of Holland & Knight LLPand Raymond A. Cardozo of Reed Smith LLP.

The state enforcement action is the California Department of Fair Employment and Housing v. Tesla Inc. et al., case number 22CV006830, the putative class action is Marcus Vaughn v. Tesla Inc. et al., case number RG17882082, and the lead case of the related individual actions is Jessica Barraza v. Tesla Inc. et al., case number 21CV002714. All of the cases are pending in the Superior Court of the State of California, County of Alameda.

The EEOC case is Equal Employment Opportunity Commission v. Tesla Inc., case number 3:23-cv-04984, in the U.S. District Court for the Northern District of California. The Owen Diaz case is Owen Diaz et al. v. Tesla Inc. et al., case number 3:17-cv-06748, in the U.S. District Court for the Northern District of California, and the appeal is Diaz v. Tesla, case numbers 23-03334 and 23-03642, in the U.S. Court of Appeal for the Ninth Circuit.