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Musk hit with Tesla investor suit over "toxic" work culture

”This toxic work environment has gestated internally for years,” says stockholder Solomon Chau in complaint filed in federal court in Austin, Texas.

Tesla CEO Elon Musk. | Photo: Lucy Nicholson/Reuters/Ritzau Scanpix

A Tesla Inc. investor accused the electric-vehicle maker’s officers and directors in a lawsuit of allowing a “toxic workplace culture” to fester at the company.

Chief Executive Officer Elon Musk and others who run the world’s largest electric-vehicle maker breached their fiduciary duty by fostering an environment of discrimination and harassment, exposing Tesla to millions of dollars in potential liability, according to the complaint filed Thursday by stockholder Solomon Chau in federal court in Austin, Texas.

“This toxic work environment has gestated internally for years, and only recently has the truth about Tesla’s culture emerged, leading to legal action from government regulators and private parties alike,” Chau said in the complaint. “Tesla’s toxic workplace culture has caused financial harm and irreparable damage to the company’s reputation.”

Tesla is fighting a suit by California’s Department of Fair Employment and Housing over racial discrimination and harassment, after the agency found a widespread pattern of mistreatment of Black workers at the electric car-maker’s factory near San Francisco. The company also faces complaints from several female employees that sexual harassment is rampant at the Fremont factory.

Tesla didn’t immediately respond to a request for comment. It said in a blog post in February that the DFEH complaint is “misguided.”

Musk “either knew, was reckless, or was grossly negligent in disregarding the illegal activity of such substantial magnitude and duration,” Chau claimed in his complaint.

Chau faulted the company’s board for the defeat of shareholder proposals aimed at addressing workplace issues at Tesla.

Shareholder activists haven’t been successful so far in pushing Tesla’s board to adopt more transparency about its use of arbitration to resolve complaints about sexual harassment and racial discrimination.

The case is Chau v. Musk, 1:22-cv-00592, US District Court, Western District of Texas (Austin).

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