Tesla loses bid to shunt sex harassment suit into arbitration

By Malathi Nayak | Bloomberg

Tesla Inc. must keep defending itself in open court against claims that female employees face “rampant sexual harassment” in its largest California factory, a judge ruled, spurning the company’s request for closed-door arbitration.

Alameda County Superior Court Judge Stephen Kaus ruled Monday that the female worker who filed the complaint can proceed with her case — even though she signed an arbitration agreement giving up her right to sue.

Kaus issued a one-sentence order denying the company’s request without explaining his reasoning.

Tesla has come under fire from shareholder activists who have pushed — so far without success — to get the electric-vehicle maker’s board to adopt more transparency about its diversity goals and use of arbitration to resolve complaints regarding sexual harassment and racial discrimination.

A federal law banning employers from forcing workers to arbitrate sex-harassment claims was signed into law by President Joe Biden in March, but the measure doesn’t cover complaints before it was enacted.

Jessica Barraza said in a proposed class-action complaint that she experienced “nightmarish” conditions as a night-shift worker at Tesla’s Fremont, California, plant. She said co-workers and supervisors repeatedly made lewd comments and gestures to her. When she complained to supervisors and human resources, they failed to take action, Barraza said.

Tesla is facing separate suits by at least six other female employees over alleged sexual harassment.

An attorney for Tesla didn’t immediately respond to a request for comment on the decision.

“I’m so grateful that this decision brings us one step closer to justice,” Barraza said in an emailed statement.

‘Public Accountability’

David Lowe, an attorney representing Barraza, called the ruling “a victory for public accountability.”

“Because of this ruling, Tesla will not be able to hide behind the closed doors of confidential arbitration,” Lowe said in a statement. “Instead, Tesla will be judged by a jury of Ms. Barraza’s peers in a public courtroom.”

Lowe told Kaus at a March hearing that the arbitration agreement was unlawful and “unconscionable” under California law.