A Tesla investor has accused CEO Elon Musk and the board of directors of damaging shareholders by ignoring a “toxic workplace culture” at the company, according to a complaint filed in a Texas federal court on Thursday.
The lawsuit filed by shareholder and New Jersey resident Solomon Chau alleges that Tesla executives have breached their fiduciary duty to investors by failing to address allegations of harassment and racial discrimination at its facilities.
“Tesla has created a toxic workplace culture grounded in racist and sexist abuse and discrimination against its own employees,” Chau’s complaint claims, adding that it “has caused financial harm and irreparable damage to the company’s reputation.”
The shareholder’s lawsuit emerged during an ongoing legal battle involving Tesla and the state of California. State officials in California’s Department of Fair Employment and Housing sued Tesla in February, accusing the company of overseeing a “racially segregated workplace” at its plant in Fremont.
Chau’s complaint also asserts that Tesla has faced numerous lawsuits from “current and former Tesla employees that revealed a disturbing litany of sexual harassment and racist abuse employees must contend with at the company.”
The complaint slams the board as well as Musk individually, asserting that the billionaire “either knew, was reckless, or was grossly negligent in disregarding the illegal activity of such substantial magnitude and duration.”
Meanwhile, Tesla’s board has blocked efforts by shareholders to implement proposals aimed at enhancing oversight of the electric car maker’s internal practices, according to the court documents.
Chau claims that Tesla’s failure to address the problem has caused the company to lose “high quality employees” and opened up the firm to various penalties and fines.
Tesla representatives did not immediately return a request for comment. Musk dissolved the company’s PR team in 2020.
The Post has also reached out to Chau’s legal team for comment.
As The Post reported at the time, the California’s DFEH complaint includes allegations that that Tesla employees, including managers, used racial slurs including the N-word, “monkey toes,” “porch monkey” and “hood rat.”
Meanwhile, Tesla has denied the claims included in the complaint, slamming the legal action in a February blog post as “misguided.”
“Tesla strongly opposes all forms of discrimination and harassment and has a dedicated Employee Relations team that responds to and investigates all complaints,” Tesla said in the post.
Tesla is also facing a union push at its Fremont manufacturing plant. In March, Musk challenged United Auto Workers to hold a vote, arguing the company’s employees are better off without labor representatives.
“Our real challenge is Bay Area has negative unemployment, so if we don’t treat and compensate our (awesome) people well, they have many other offers and will just leave!” Musk said at the time.
The plaintiff, Keith Johnson, is seeking $86 billion in damages, plus tripled damages of $172 billion for losses incurred from trading dogecoin since 2019. He wants to represent a class of people who have lost money investing in dogecoin.