Judges are taking hostile work environment claims against companies more seriously these days, but what happens when a victim tries to hold a corporate founder personally responsible?
That’s a question New York’s highest court is currently wrestling with. At issue is media mogul Mike Bloomberg and an incident involving sexual assault by a supervisor in his company’s marketing department. Although Bloomberg himself is not alleged to have any direct role in the events, he was accused of “creating, encouraging and condoning” a culture at Bloomberg LP that allowed for the behavior.
An unnamed former Bloomberg sales employee, referred to in the suit as Margaret Doe, is pursuing a $20 million sexual harassment suit against the company over claims she was drugged and raped by her boss, former company executive Nicholas Ferries. She alleged the company was indifferent to claims of harassment made by herself and other female employees.
The state’s top court, the New York Court of Appeals, heard arguments on January 7 over whether to reinstate personal liability claims against Mike Bloomberg. He is the co-founder, CEO, and majority owner of the roughly $50 billion company. A mid-level appellate panel had previously let the billionaire out of the case, finding no evidence presented that he had ever interacted with the alleged rapist or knew about the purported behavior.
Owning a company does not necessarily make one personally liable for misdeeds that go on there. Generally speaking, in the U.S., liability by the company stays within the company — although there can always be exceptions made in extraordinary circumstances.
However, this is not the first time Mike Bloomberg has been accused of promulgating a culture that condones harassment or is otherwise discriminatory against women. A former saleswoman alleged the corporate founder told her to “kill it” when he learned of her pregnancy in a previous lawsuit. The trading-analyst-turned-financial-media-titan has long been accused of fostering a profane and misogynistic culture in the early days of Bloomberg LP (founded in 1990).
Bloomberg later became mayor of New York City for three terms starting in 2001 and became well-known for philanthropic activities and initiatives relating to climate change and protecting the environment. But he could not escape the darker elements in his corporate past.
His short-lived 2020 presidential campaign was torpedoed by fellow Democratic contender Elizabeth Warren, a senator from Massachusetts who has championed consumer protection and tougher regulations for Wall Street. On the debate stage, Warren attacked Bloomberg as an “arrogant Bloomberg” and drew attention to past claims of sexism and harassment against him and his company. She also berated him for enforcing non-disclosure agreements against victims of harassment, preventing them from speaking out.
In Margaret Doe’s case, she alleged she was “tormented” by her supervisor, Ferris, when she began working for the company in 2012, shortly after graduating from college. She alleged Ferris raped her twice in 2013 after several inappropriate comments and unwanted touching.
Her lawyer argued that putting Michael Bloomberg on the hook personally for the bad behavior by the former employee incentivizes the implementation of a better culture from the top-down.
“There shouldn't be a cutoff, as it were, that if you're elevated enough within a corporate hierarchy, therefore you're insulated from liability as a result of your own conduct,” the lawyer told New York’s top court.
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