A California federal jury’s decision giving $3.2 million to a former Tesla Inc. contractor in a long-running racial discrimination case opened a new legal question over whether the amount awarded for punitive damages in the case is in line with judicial precedent.
The verdict reached earlier this week in the US District Court for the Northern District of California has cleared the stage for a post-trial battle over the award—98% less than the “staggering” $137 million a different jury awarded to Owen Diaz two years ago.
Diaz, who is Black, sought a retrial on damages after the trial judge in April 2022 reduced the initial award because it was excessive and out of sync with what the evidence in the case and Supreme Court precedent would allow. The judge slashed the original $6.9 million compensatory damages payout for emotional distress to $1.5 million and the $130 million punitive damages award to $13.5 million.
The high court’s 2004 decision in State Farm v. Campbell held that a punitive damages award should have a single-digit ratio to the compensatory damages award. Punitive damages that are more than 10 times compensatory damages would violate due process requirements, it said.
But the Diaz jury came back with $175,000 for compensatory damages and $3 million in punitive damages. Employment attorneys said the latest verdict may once again invite legal scrutiny because it’s...
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