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Tesla faces investor test after big jury award over racism By Reuters

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© Reuters. FILEPHOTO: A dealership in London is displaying the logo for Tesla, a car maker, on May 14, 2021. REUTERS/Matthew Childs

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Hyunjoo Jin. Ross Kerber. Rick Linsk

SAN FRANCISCO/BOSTON – An employee of Tesla has been awarded a $137 Million jury verdict for workplace racism. (NASDAQ:) Inc) This puts pressure on Tesla, whose shareholders are expected to vote Thursday on a plan to examine how it deals with similar claims from full-time workers.

This non-binding resolution from shareholders asks Tesla to examine the effects of its current use of mandatory arbitral to settle complaints about harassment and discrimination at work. Tesla is opposed to this plan.

A San Francisco federal jury awarded the prize to Owen Diaz, an ex-Tesla worker. “The verdict sends a message to corporate America that you need to make sure that racist conduct is not occurring,” Lawrence Organ, his attorney told Reuters.

Diaz was allowed to stand trial in public because contract workers are not subject Tesla’s mandatory arbitration, which requires employees to solve disputes outside the court system.

Tesla advised against the resolution, stating that arbitration would benefit both sides with a fair settlement and a faster return to their priorities, without entangling them in long litigation.

Some companies in technology have reduced mandatory arbitration or removed it altogether. Uber (NYSE: Lyft (NASDAQ) Does not require mandatory arbitration of sexual harassment cases. Google (NASDAQ: ) eliminated mandatory arbitration in cases involving sexual harassment. Nearly half of all Goldman Sachs Group Inc (NYSE) shareholders voted for the examination of mandatory arbitration by the bank.

Loyola University New Orleans professor of law Imre Salai stated that such a verdict against Tesla would lead to “shaming, and awareness” about the company’s problems.

He said, “The public realizes that Tesla must change. This increases pressure for Tesla.

The arbitration agreement between Tesla and its employees and customers prohibits them from challenging in public court cases about discrimination (pay, gender, disability, and race) as well as products defects.

Tesla has been sued in approximately 100 U.S. Federal and State Court cases, as well as lawsuits, over claims relating to employment, personal-injury and contract issues, according to Reuters.

Kristin Hull, CEO of Nia Impact Capital who filed the resolution, said Monday’s jury verdict could help boost support. Similar measures were approved last year and received 27% of the votes. Musk owns 23.1% shares in Tesla.

She told Reuters that the verdict was “alarming”. Tesla’s presence in these cases is a major brand risk.

Tesla’s reputation for clean transportation has made it an attractive investment option for Governance, Environmental, and Governance investors. She said, “This has taken many environmental investors by surprise and it’s not their happy.”

Nia Impact Capital attempted to influence major shareholder BlackRock Inc. (NYSE:), which funds voted against last year’s resolution. BlackRock refused to comment.

Tesla stated that the company has hired employees in order to resolve complaints and promote equality of opportunity over the many years Diaz was employed there.

In a blog post after the jury verdict Tesla Vice President Valerie Capers Workman wrote that “we will continue to remind everyone who enters the Tesla workplace that any discriminatory slurs – no matter the intent or who is using them – will not be tolerated.”

Glass Lewis and Institutional Shareholder Services (ISS), both proxy advisory firms, have still recommended that investors support this proposal. They did so last year with a similar proposal.



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