(Reuters) – A federal judge has ruled that Tesla must defend itself at a trial over allegations it knew foreign workers at one of its facilities were threatened with deportation if they reported an injury and worked long shifts that violated forced labor laws.
FILE PHOTO: A Tesla showroom is seen in Santa Monica, California, U.S., January 4, 2018. REUTERS/Lucy Nicholson/File Photo
U.S. District Judge Lucy Koh, in San Jose, California, rejected on Monday Tesla’s request for an early dismissal of the lawsuit, paving the way for the plaintiffs to seek documents and witnesses to build their case.
The decision comes as Tesla faces intense pressure to turn a profit and days after Chief Executive Officer Elon Musk stepped down as chairman to settle allegations by the U.S. Securities and Exchange Commission that he misled investors.
Tesla said it investigated the allegations about the foreign workers and broke ties with a subcontractor, ISM Vuzem, that it said did not live up to its expectations. “We’ve also since improved our supplier contracts and policies to better stop bad behavior,” the statement said.
According to the lawsuit, Gregor Lesnik of Slovenia came to the United States on a B-1 visa and worked 250 hours per month for less than $950, well below minimum wage. It also alleges that foreign workers were threatened with deportation or reduced pay if they reported injuries or became ill.
The 2016 lawsuit by Lesnik and co-plaintiff Stjepan Papes of Croatia and seeks class action status on behalf of foreigners with B-1 visas working at construction sites at U.S. auto plants.
Tesla was one of several automakers named as defendants, but the only one that was not dismissed from the case because plaintiffs only alleged to have suffered threats of deportation at Tesla’s plant in Fremont, California.
Koh denied a motion to dismiss for two Tesla subcontractors, Eisenmann Corp and ISM Vuzem because they operated at the same plant.
Eisenmann and its attorney did not immediately respond to a request for comment. Vuzem of Slovenia did not answer calls placed after hours. The company is not represented by an attorney in the case, according to the court docket.
Koh said her ruling was based on a “generous reading of the at times incomprehensible” lawsuit, but also said the allegations against Tesla and Eisenmann were “uncharacteristically specific.”
Koh rejected arguments that Tesla and Eisenmann were not liable because the alleged abuses were committed by Vuzem. Under the law, a party that benefits financially from another’s abuses also bears liability, according to Koh.
Reporting by Tom Hals in Wilmington, Delaware; Editing by Leslie Adler