A jury awarded Esfahani, owner of the Eastern Shore Toyota dealership in Daphne, Alabama, $2.5 million in compensatory damages and a further $5 million in punitive damages, Reuters reports.
He had originally asked for $28 million in damages from the rival Bob Tyler Toyota dealership in Pensacola, Florida, after employees there falsely described him as an Islamist terrorist.
According to the lawsuit, several salespeople told people considering buying a car from Esfahani that his profits financed the Taliban.
One salesman, mistakenly portraying Esfahani as Iraqi, reportedly said:
"He is funneling money back to back to his family and other terrorists. I have a brother over there and what you're doing is helping kill my brother."
Bob Tyler employees apparently regularly referred to Esfahani's business as "Middle Eastern Toyota Shore," the Pensacola Business Journal reports.
Esfahani, a naturalized U.S. citizen who fled Iran in 1980 following the Islamic revolution, said that moral victory was more important than money:
"The feeling I received in the courtroom for the truth to come out was worth a lot more than any money anybody can give me."
He said that he took his slanderers to court in order to show businesses that they could not get away with tactics he describes as "un-American".
See Esfahani interviewed on local news channel WKRG: