On January 4, 2023, the California Court of Appeal rejected Tesla’s attempts to require a putative class of current and former Black workers employed in its Fremont, California manufacturing plant to arbitrate most of their race discrimination and harassment claims. The workers allege that Tesla is liable for years of severe and pervasive racial discrimination and harassment committed against Black workers and contractors by Tesla supervisors, employees, and others under Tesla’s control and direction.
Affirming the trial court in full, the Court of Appeal held that the plaintiffs and class members who were initially hired by a staffing agency to work at the Tesla plant, before becoming direct employees of Tesla, were not required to arbitrate any portion of their claims that arose before they became directly employed by Tesla. The Court also held that Tesla’s arbitration agreement was invalid and unenforceable to the extent it prohibited the plaintiffs and class members from pursing public injunctive relief in any forum, thereby entitling plaintiffs to pursue their claims for public injunctive relief in court. As the Court concluded, the workers’ request for an injunction preventing further discrimination under the Fair Employment and Housing Act was a request for public injunctive relief because such “invidious discrimination harms the public at large, including individuals lacking any direct connection to the workplace involved.” Vaughn v. Tesla, Inc., 87 Cal.App.5th 208, 232 (2023).
The Court of Appeal also rejected Tesla’s argument that the Federal Arbitration Act, as interpreted in Viking River Cruises v. Moriana, 142 S.Ct. 1906 (2022), preempts the California rule prohibiting contractual waivers of the right to seek a public injunction.
On April 12, 2023, the California Supreme Court denied Tesla’s petition for review of the Court of Appeal’s opinion, setting the stage for the workers’ claims to proceed on their merits in Alameda County Superior Court.
Altshuler Berzon LLP served as lead counsel for the plaintiffs on appeal; the plaintiffs are also represented by the Bryan Schwartz Law Group and California Civil Rights Law Group.