Dictatorial and overbearing owners or CEOs, who do what they please when managing a business, can cause multiple problems for their companies. The owner’s or CEO’s overbearing, and oftentimes intimidating, conduct can lead to various types of claims, including claims by shareholders for oppression or breach of fiduciary duty, prosecution for violation of criminal statutes if the misconduct is serious enough, or claims of discrimination by employees, as the recent case of Lee v. CURT Manufacturing demonstrates.
Jody A. Lee (“Lee”) was a purchasing agent for CURT Manufacturing, Inc. (“CMI”). During Lee’s employment, CMI’s CEO, who called Lee a “bitch” on two dozen occasions, stated “I hate that bitch” on six occasions and commented that “she [Lee] must be on Prozac.” The CEO also regularly advised management that he knew many men who saved their companies millions of dollars and negatively compared Lee’s efforts to such men. Additionally, the CEO criticized Lee’s performance, but would not criticize male employees who performed similarly. Finally, on several occasions, the CEO commented that women should stay at home and take care of the kids.
As CMI grew, it became necessary to add a senior purchasing agent to manage CMI’s purchasing department. Lee applied for the position, but was not offered an interview and was not hired to fill the position. Instead, CMI hired a male to be the company’s senior purchasing agent. Later, after a restructuring, Lee and two male employees were terminated. The two males were offered severance benefits without signing a waiver. Lee was advised she would not receive severance benefits unless she signed a waiver. Lee refused to sign the waiver and proceeded to file suit against CMI for sex discrimination.
In response to Lee’s suit, CMI admitted the CEO’s sexist comments, but argued that there was no evidence which connected the CEO’s comments to CMI’s decision to terminate Lee. After noting that circumstantial evidence may be used to prove discrimination, the court reviewed the evidence presented by Lee. The court held the CEO’s chauvinistic comments and his direct remarks about and treatment of Lee showed that the CEO “had little respect for women in the workplace.” Moreover, there was evidence that these chauvinistic attitudes may have resulted in CMI treating men differently than women when hiring the senior purchasing agent and determining whom to terminate during the restructuring. Thus, a jury could find CMI improperly discriminated against Lee when she was not hired for the senior purchasing agent position and later terminated during the restructuring.
The Lee case is an example of how the overbearing conduct of a senior officer may result in a discrimination claim being filed against a company. Corporate mismanagement cases such as those involving Enron, Arthur Andersen, Tyco, Adelphi, and WorldCom, and criminal cases such as those against Martha Stewart, Richard Strong of the Strong Funds, and insurance broker Marsh & McLennan Cos., demonstrate the high stakes involved if the Board of Directors does not rein in an overbearing owner or CEO. If you have a question about the conduct of an overbearing owner or senior officer, please telephone the member of the firm with whom you regularly work to discuss the appropriate action to be taken.