Judge clears Tesla (TSLA) of wrongdoing in toxic workplace lawsuit

Tesla (NASDAQ: TSLA) cleared of any wrongdoing on Tuesday in a lawsuit concerning to a toxic workplace, initiated by shareholders.

On Tuesday, a federal court determined that the lawsuit filed by the shareholders had deficiencies in its allegations. The lawsuit had accused Tesla of causing financial and reputational damage due to a series of incidents and reports that have emerged over the past few years.

The allegations included claims of sexist abuse, racism, and discrimination inside facilities.

According to Soloman Chau and Alvin Janklow, investors involved in the suit, Tesla’s work environments “exposed the company to significant liability risk.”

A U.S. District Court of the Western District of Texas dismissed the suit on the grounds that “at least some of the defendants aren’t likely liable.”

Judge David Alan Ezra highlighted that when deciding if a demand is futile, courts should look at whether someone gained something from the misconduct, whether the claims seem likely to be valid, and if there's any conflict of interest with someone who benefited or could be held responsible.

Ezra dismissed the case without prejudice, the plaintiffs have the opportunity to amend their complaint within the next 30 days if they choose to do so.

Shares of TSLA are up 1.99% in afternoon trading Wednesday.

By Michael Elkins | [email protected]

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