Update: Headline revised for accuracy
Tesla has been cleared of wrongdoing in a toxic workplace lawsuit that was brought on by shareholders, at least for now.
On Tuesday, a federal court ruled that the shareholders’ lawsuit had shortcomings in terms of the claims of their suit, which accused Tesla of causing both financial and reputational harm because of the numerous stories and other cases that have come up over the past few years. It has been dismissed without prejudice.
These include claims of sexist abuse, racism, and discrimination inside the company’s factories. Investors who filed the suit claim that Tesla’s work environments “exposed the company to significant liability risk,” according to Soloman Chau and Alvin Janklow, investors who sued the automaker said in the complaint.
A U.S. District Court of the Western District of Texas dismissed the suit on the grounds that “at least some of the defendants aren’t likely liable,” according to a report from Bloomberg Law.
Judge David Alan Ezra said that courts must consider several things to see whether a demand would be futile, including whether a person received a benefit for the misconduct, whether the claims are substantially likely, or if they lack independence from a person who received a benefit or faces liability.
Futility is found if more than half of the board can be found as applicable to those terms, according to the report.
Ezra said fewer directors should be counted because some had left Tesla before the lawsuit was filed.
Ezra dismissed the case without prejudice, but the plaintiffs are granted the right to file an amended complaint within 30 days.
Tesla has fended off cases involving racism from its factories for years, including the most notable case involving Owen Diaz, which initially rewarded him $137 million for facing harassment at the company’s Fremont factory while he worked there as an elevator operator.
The judgment was appealed as Diaz attempted to get more money and changed to $15 million, a significantly lower amount than initially ruled. In a second trial, Diaz was awarded just $3.2 million.
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