Diaz v. Tesla, Inc.
- William Orrick
- 3:17-cv-06748
- U.S. District Court · Northern District of California
- 3
In Diaz v. Tesla, Judge Orrick allowed a jury instruction to let jurors decide whether Diaz had contract rights supporting a federal civil-rights claim.
Owen Diaz, Tesla, Inc., and the jury deciding whether the contractual relationships gave Diaz rights supporting a claim under 42 U.S.C. § 1981.
What happened
In Diaz v. Tesla, Inc., et al., the parties disputed a jury instruction about when someone may have rights under a contract without signing it or being a formal party. The proposed instruction concerned contractual relationships involving Tesla and nextSource or Citistaff.
Tesla objected to mentioning nextSource, arguing that Diaz had not alleged a contract with that company. The court allowed nextSource to remain in the instruction because the jury would decide whether a contractual relationship could support liability under the federal law protecting equal rights to make and enforce contracts.
Judge William H. Orrick changed the proposed wording to require proof that the contracting parties intended Diaz to receive benefits or privileges that were not incidental or remote. The order addressed the jury instruction and does not state the ultimate result of the underlying case.
The detailed version
- Diaz v. Tesla, Inc. · No. 3:17-cv-06748
- William Orrick
- Oct. 1, 2021
Background
The parties disputed a jury instruction titled “Liability for Civil Rights Violations Based on Contractual Relationship.” Owen Diaz proposed instructing the jury that he did not need to sign a contract or be a formal party to it to have rights under the contract. His proposed language would have allowed him to establish those rights by showing that he received benefits or privileges under a contractual relationship involving Tesla and nextSource or Citistaff, and that the benefits or privileges were not incidental or remote.
Tesla objected to referring to nextSource because, according to Tesla, Diaz had not alleged that nextSource had a contractual relationship with him.
Issue
The court considered whether nextSource could remain in the instruction and how the instruction should describe when a person who is not a contracting party may assert rights under a contract under 42 U.S.C. § 1981. Section 1981 protects equal rights to make and enforce contracts, including the enjoyment of contract benefits and privileges.
Court’s reasoning
The court concluded that nextSource could remain in the instruction because the jury would determine whether a contractual relationship existed that could support liability under Section 1981. The court noted that the Supreme Court has reserved the question whether an intended third-party beneficiary—a person the contracting parties meant to benefit—may sue under Section 1981. The court found several reasons to think that such a person may sue, including the statute’s text, its purpose of preventing racial discrimination in contracting, and decisions from several federal courts of appeals.
The court also changed Diaz’s proposed wording. The revised instruction would require Diaz to show not only that he received benefits or privileges under the contractual relationship, but also that the contracting parties intended him to receive those benefits or privileges and that they were not incidental or remote. The court stated that this more accurately described California’s test for determining whether someone is an intended beneficiary.
Disposition
The court permitted nextSource to remain in the jury instruction and adopted the modified formulation. This was an order concerning the jury instructions; the opinion does not state the ultimate outcome of Diaz’s underlying claim. The order was entered by Judge William H. Orrick on October 1, 2021.
Read the full 3-page opinion on CourtListener, the free public archive maintained by the Free Law Project.